We expect the Fed to raise the target range by 25bp to 1.50-1.75%.
We expect the Fed to maintain the hiking signal at 3 hikes this year but lift the median dot for next year from 2.25 to (close to) 3 hikes. We also expect the Fed to raise rates three times both this year and next year.
The hike is unlikely to steer a new direction for USD. We think Trump policies are more important for USD at present. Near term, EUR/USD is set to stay in the 1.21-1.26 range.
5y point on the US curve could see upward pressure. We expect the US curve to continue to flatten both 2y10 and 5y10y after the FOMC meeting.
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