Fed governance, legal risks and hawkish repricing post-Mar FOMC; Apr29 hold/Jefferson Logan QT; FDIC stablecoin regs
Key Questions
What is the probability of the Fed holding rates at the April 29 FOMC meeting?
There is a 99.5% probability of the Fed holding rates steady at 4.25-4.50%, marking the third consecutive hold. Hike odds have plunged according to market expectations.
What did Fed's Jefferson say about interest rates?
Jefferson stated that rates are well positioned amid uncertainty, emphasizing steady policy given labor market conditions. The Fed left rates unchanged at the March 17-18 meeting due to elevated uncertainty.
What is Logan's plan for shrinking the Fed's balance sheet?
Logan outlined a path to shrink the Fed's balance sheet from $6.6 trillion, with bank reserves around $3 trillion. This follows policy allowing holdings to contract naturally.
What is Wells Fargo's outlook for Fed rates in 2026?
Wells Fargo expects the Fed to hold rates at 3.50% with no cuts in 2026, revising its monetary policy outlook to 'higher for longer.' This reflects a hawkish repricing.
What are the FDIC's proposed rules for stablecoin issuers?
Under the GENIUS Act, the FDIC proposes reserves and capital requirements for FDIC-supervised stablecoin issuers, effective in 2027. This aims to regulate stablecoin activities more stringently.
What inflation expectations are mentioned?
Short-term inflation expectations stand at 3.4%. This contributes to the Fed's cautious stance on rate adjustments.
What key issues face the Fed beyond interest rates?
Beyond rates, the Fed faces governance, legal risks, and quantitative tightening challenges. The April 29 meeting expects no change amid these concerns.
How have markets repriced post-March FOMC?
Markets have adopted a hawkish repricing, with reduced odds of rate cuts and focus on steady policy. This aligns with views from officials like Jefferson and analysts like Wells Fargo.
Apr29 FOMC hold 99.5%prob at 4.25-4.50%; Jefferson rates steady/labor; Logan QT $6.6T BS/reserves $3T; inf exp 3.4% short; Wells Fargo no '26 cuts/hold 3.50%; FDIC GENIUS Act proposal reserves/capital for stablecoins effective '27.