Powell acknowledged divergent views within the FOMC on the outlook for policy rates, highlighting a lack of broad consensus around major shifts in the dot plot or Summary of Economic Projections. This reinforces expectations that near-term rate decisions will remain data-dependent, with limited forward guidance driving tighter control of rate expectations through the terminal policy rate channel. The comments reduce the likelihood of a hawkish or dovish surprise in the upcoming SEP update, keeping front-end Treasury yields and fed funds futures anchored amid range-bound volatility. Global dollar funding markets and EM carry assets remain sensitive to the implied path of U.S. real yields, particularly as dispersion in FOMC forecasts could fuel volatility in forward rate pricing. Traders will focus on the next PCE inflation report as the key catalyst for reassessing the timing and magnitude of potential rate changes.
POWELL: THE COMMITTEE DOES HOLD LIVELY AND DIVERGENT VIEWS, ADDING THAT MAJOR CHANGES TO THE DOT PLOT OR THE SUMMARY OF ECONOMIC PROJECTIONS LACKED BROAD SUPPORT — AND ADMITTING HE WAS NEVER THE WORLD'S BIGGEST FAN OF…
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