The Fed is more confident on the recovery and brings forward to 2023 the first hike

Highlights:

• The Fed is projecting a faster return to normality, and therefore monetary normalisation could be speeded up; two hikes in 2023, bringing the Fed funds rate to 0.625%, are now deem appropriate.
• Growth projections for 2021 were marked up, and expected inflation was raised. However, the medium-term forecasts remain broadly unchanged with respect to March. The spike in inflation is considered transitory.
• The FOMC started talking about talking about tapering. No timeframe was hinted at but we expect an announcement by the September meeting.
• The surprise move lifted bond yields, especially at the short end of the curve and caused the S&P500 to lose 0.6% on the announcement.

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