Summary

• Absolutely nothing is priced in terms of Fed funds futures contracts for the 29 April Federal Reserve policy decision, but the market still leans in the direction of eventual rate cuts with around 10bp of easing priced by the end of the year.
• In terms of the outlook for monetary policy, we are unlikely to get anything particularly revelatory.
• In terms of inflation, it has been five years since either headline or core consumer price inflation was at or below the 2% target, and higher fuel and airline fares mean CPI looks set to break back above 4% imminently.
• Even though the Fed story is far less of a driver for the dollar than events in the Middle East, the FX market will still take note of the FOMC statement and Chair Powell’s press conference.

By James Knightley | Padhraic Garvey, CFA | Chris Turner

Rate cuts remain more likely than hikes

Absolutely nothing is priced in terms of Fed funds futures contracts for the 29 April Federal Reserve policy decision, but the

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