Nordea’s Jan von Gerich expects Kevin Warsh’s first FOMC meeting on 17 June to deliver a more neutral policy stance, with earlier projected rate cuts likely removed from the dot plot and some hike calls appearing. He thinks Warsh will seek consensus and credibility rather than appeasing political pressure, and any communication changes will be signalled rather than implemented immediately.

Dot plot seen shifting away from cuts

"After the ECB’s rate hike, the focus will now shift to the FOMC next week, with the decision out on Wednesday 17 June."

"Will Warsh try to forge consensus and side with more neutral or even slightly hawkish views, strengthening his credibility, or will he dissent at his first meeting to appease the President’s expectations and seriously dent his credibility right from the start?"

"We think the former approach is more likely."

"The statement itself is likely to adopt a more neutral stance on further rate moves, while the dot plot of the individual rate forecasts of FOMC participants will probably no longer include the rate cuts that were in the profile for this year in March."

"Some calls for hikes are actually also likely to creep into the dot plot."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)