Bernanke to repeat his message – maybe markets will listen this time
The forward-looking parts of the FOMC statement are likely to remain unchanged but the description of current developments might see some changes. In particular, the May statement said that longer-term inflation expectations have remained stable but since then market inflation expectations (measured as 5y/5y forward breakeven inflation) have declined from 2.6% to 2.3%. Other inflation expectations measures have remained stable but nevertheless the statement could acknowledge this recent trend, stating that some measures of inflation expectations have declined but remain at levels consistent with the Fed’s target of 2% inflation.
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Danske Bank