📝 Key If Powell Signs At An Extension Of 50Bps Past Dec.:UBS Strategy

Unanimous decision for 75bp. They already have mentioned that they would be taking rates into very restrictive territory, but the market kneejerk is taking the statement about "taking cumulative tightening lags into account" as dovish so the USD is selling off.

The press conference was always going to be the most important part of the FOMC, but the market clearly wants to lean into the 'peak Fed' narrative and are going to sniff out and semblance of the pivot.

It shouldn't come as a surprise to anyone that the Fed is having discussions about slowing the hiking pace from 75bp per meeting. I think more important will be if there is a further extension of consecutive 50bp or not. I think Powell will want to have any of the cuts in the curve for 2023 priced out, but the FED is going to leave the door open for more data to come in between now and the December FOMC for the downshift to a 50bp hike.

- UBS Strategy