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By now, enough has been said about what the Fed may do today: consensus expects that to fight soaring inflation, the Fed will enact a 25bps rate hike (but not 50bps unless Powell really wants to shock markets), the first since 2018, together with forward guidance for a string of hikes. Considering where inflation is, it is very clear by now that the Fed is far behind the curve - the list time CPI was here, the Fed Funds rate was 15%!

Needless to say, a rate hike has long been priced in by the market which sees more than 100% odds of a 25 bps hike (and small odds of a 50bps rate hike) and more than 7 rate hikes for all of 2022.

Consensus also expects a a mention of Ukraine risk, and while the Fed is not expected to provide details on B/S reduction, it may share a light calendar guide; Consensus also expects dots to be raised to four/five hikes in 2022 at 1.1%/1.4%) but the "terminal rate" dot will unchnaged; elsewhere, the 2022 GDP dot will stay at 3.3% while the Fed raises both the 2022 and 2023 PCE dots.

The FOMC may, of course, surprise either hawkish or dovish. Here is how to determine which way the Fed is leaning:

• Dovish: Any hike dissenters: no forward guidance for hikes in statement; strong concerns over Ukraine in statement FFR 2022 dot £ 0.9%. long run dot < 2.5%: 2022 GDP dot < 3%: mild rises in 2022 PCE dot/no rises in 2023.
• Hawkish: Shock 50bps hike, or any dissenters to just 25bps: no mention of Ukraine risk; concern over long-run inflation expectations; details on B/S reduction; 2022 FFR dot > 1.4; long run FFR dot > 2.5%; 2022 GDP dot > 3 4%: rise in 2024 PCE dot.

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