Fed: Dovish hike? - ANZ

Analysts at ANZ explain that the markets took it as a dovish hike from the US Fed as soon as the FOMC statement was issued, with a slightly softer characterisation of the state of the economy and details of the balance sheet reduction plan, which, when underway, will likely take pressure off the Fed to tighten.

Key Quotes

“Whatever your view, there’s a lot to get your head around. The Fed said it wouldn’t alter its balance sheet till hikes were well underway. So if we’re now well underway, how close to neutral policy are we? And how gingerly will the Fed feel its way through balance sheet trimming? For now, the market has taken a dovish spin on the Fed, but at the end of the day it depends on the data.”