– We expect a softer tone at this week’s FOMC meeting but no change in policy.
– A scale up in monthly asset purchases is not off the table but we do expect it to take more time with weak data. So far, FOMC members prefer to guide market expectations with communication rather than by adding to its purchases.
– We expect signs of improvement to have materialised ahead of the June FOMC meeting and hence we still believe the next move will be a tapering of QE.
– A slightly more dovish FOMC will probably sustain, but not accelerate, the downward trend in rates.
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Danske Bank