by Calculated Risk on 3/10/2017 06:48:00 PM

A few excerpts from a research note from Merrill Lynch:

The markets listened to the chorus of Fed officials and are now pricing in near certainty of a hike. With the rate decision on 15 March likely to be a non-event, attention turns to the Summary of Economic Projections and the press conference. We believe the combination of a shift higher in the dots and language changes in the statement will send a hawkish signal. However, we suspect that Chair Yellen will sound more balanced in her press conference.

We expect a number of tweaks to the statement which will deliver a more hawkish message. In the first paragraph, we think the Fed will present a more positive assessment of the economy. We also think that the Fed will change the economic outlook paragraph to argue that the balance of risks has improved. ...

We think Chair Yellen's press conference will be less hawkish than the statement or SEP. ... Chair Yellen is likely to sound more positive about the outlook, noting the improvement in sentiment measures and reduction in labor market slack. However, we expect her to argue that inflation should only increase slowly to the target. Also, she is likely to argue that the Fed is not behind the curve and isn't “playing catch up” with policy. We also look for Yellen to note that the committee is discussing the plan for addressing the balance sheet and that more formal communication will be forthcoming. In the meantime, she is likely to note that the Fed will continue with the reinvestment program until an increase in fed funds rates is “well underway”.
emphasis added