However, as Bloomberg’s Vincent Cignarella warns, the difference in what the Fed says and what the markets hear may once again be on display during Wednesday’s press conference. Indeed, the Fed has previously said the fed funds rate is the central bank’s primary monetary policy tool, not the balance sheet. As such, if the Fed holds to this mantra, investors looking for comments curtailing the balance sheet runoff may be “massively disappointed” according to the Bloomberg macro commentator.
He is not alone. In a note released by Bank of America overnight, the bank’s strategist expect the Fed to deliver a message of patience on Wednesday, but they are “skeptical it will be as dovish as the market expects.”