Highlights:

• The Fed acknowledged the sharp improvement in the inflation outlook but stepped up the efforts to push back against expectation of rate cuts as early as in March. Six months of good inflation data are not yet enough for the FOMC to declare victory. 
• The almost painless disinflation owes much to the unwinding of the bottlenecks caused by the pandemics. Once they are completely over it is not yet clear how the economy will behave, and this further suggest caution n loosening policy.
• We still think that, by the May meeting the Fed will have enough evidence to start cutting rates, and we expect a total of 100bps loosening this year. The evolution of Quantitative tightening will be discussed in the next meeting. We see the balance sheet runoff to end around the turn of the year. 
  
   

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