USDJPY TECHS: Bearish Theme Remains In Play

All analysts expect the FOMC to hold rates steady at the January meeting.

• Statement: Changes are seen being limited largely to the first paragraph describing current economic conditions. Most focus is on the labor market language, which – for those analysts who expect statement tweaks – could shift slightly to reflect some stabilization in conditions in recent months, vs previous easing.
• Forward guidance is expected to be unchanged.
• QT: The Fed is seen ending quantitative tightening (more specifically, for Treasuries, with MBS continuing to run off), at some point between March and September 2025 – consensus is for a mid-year (ie June) end.

Analysts enter the first FOMC meeting of 2025 expecting anywhere from zero rate cuts to 125bp worth of reductions by year-end, with March the first plausibly “live” meeting.

• The central expectation is for 50bp of reductions in 2025, with analysts either looking for front-loaded (March, June) or back-loaded (September, December) reductions.
• Some see more easing in 2026 than in 2025 (Barclays, Deutsche Nomura).
• None expect the FOMC to hike.

Note to readers: This update of our Jan 24 preview includes analyst expectations for the January FOMC meeting and beyond (Starting Page 20)

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

FedPrevJan2025 - With Analysts.pdf