USD: FOMC on hold with only few changes in statement - Barclays

eFXdata reports that Barclays Research discusses its expectations for the FOMC policy meeting on Wednesday.

"We expect the FOMC to hold rates steady at its January meeting, maintaining its message that the US economy is in a good place and that the policy rate setting is appropriate. We expect it to raise both the IOER and RRP rates by 5bp with an eye toward pushing the policy rate closer to the middle of its current 1.50-1.75% range. Markets largely anticipate these technical adjustments in light of signals from the minutes to the December FOMC meeting. We do not expect the committee to make any announcements regarding its balance sheet plans," Barclays notes.

"However, in the press conference, we expect Chair Powell to continue to field questions about the balance sheet, with the Powell repeating the committee's view that the recent expansion is technical in nature and not quantitative easing. In the statement, we expect few changes, with the committee continuing to describe labor markets as strong, economic activity rising at a moderate rate, and market-based measures of inflation expectations as low. With data indicating that consumer spending decelerated in Q4 2019, the statement may downgrade the assessment of the pace of household spending from "strong" to "solid," Barclays adds.