- Drew Matus, New York-based deputy chief U.S. economist at UBS AG
All meetings under Janet Yellen's leadership were dragging investors into the drowsy state. This week's meeting is also unlikely to offer any surprises, however, there are four major things you should keep in mind during the meeting. First of all, policymakers are likely to provide a fuller picture on the economic stance, not just saying the economy is gradually improving. The assessment can be more detailed, but we do not expect any change in the sentiment. Secondly, the Fed will most likely proceed with its sanguine outlook and announce another $10 billion reduction to the monthly purchases. Yellen will most likely reiterate her pledge to change the speed of tapering and the course of action if needed, but these words will have a muted impact on markets. Additionally, April's meeting is going to be the last one for the Governor Jeremy Stein, who will be remembered by his warning about the dangers that can be posed by excessive risk-taking in financial markets. The final point will be the market reaction. The Fed is likely to stay generally dovish, but the real question is whether markets will react to the growing uncertainty provoked by the shift in the underpinnings of the central bank's forward guidance.
In general, no major surprises are expected this week, however, investors should keep an eye on the underlying monetary policy transitions.
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