What to watch for the July FOMC meeting is likely to feature a cautiously optimistic assessment of the recent data and outlook, but otherwise be noncommittal on policy. The focus will be on the statement language, where we do not expect any explicit signals about liftoff timing. The statement will be released at 2 PM ET. There is no press conference or forecast update scheduled for this meeting, so small changes in the statement language could get magnified by market participants. Depending on the calculation method, markets are pricing in between a 25 and 50% probability of a September hike; Fed officials should be comfortable with expectations in the upper-half of that range, in our view.
(Bank of America-Merrill Lynch)