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Large banks: what to expect from the Fed?

FOMC policy announcement, economic projections and statement will be released at 18:00 GMT on Wednesday, March 18. Press conference from Janet Yellen will follow at 18:30 GMT.

What do analysts at large banks expect from the meeting?

CIBC: The Fed will likely drop its pledge to stay patient. However, the sentence will likely be replaced by an emphasis on being 'data dependent'. Softness in recent growth indicators will be mentioned. What’s more, the Fed will cite reasons to limit pace of hikes - rising USD and yields falling overseas. Market reaction to the meeting will be muted.

Deutsche Bank: FOMC is expected to change its forward guidance language so as to allow the Committee the flexibility to raise interest rates sometime around the middle of this year (possibly in June). Fed’s economic projections should indicate a more confident outlook for the labor market, highlight disinflationary risks. During the press conference Yellen will likely elaborate on the FOMC's rationale for beginning the process of policy normalization.

Barclays: The Fed is expected to drop "patience" from its statement at the March meeting. However, the statement will likely introduce downside risk to inflation from a stronger USD. As a result, markets will believe that June rate hikes are off the table and will see the USD rally paused.

Goldman Sachs: The normalization of US monetary policy is a powerful force for EUR/USD lower looking ahead.

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