NY Mellon: The Fed will cut rates hawkishly this week; the dot plot is expected to reveal policy cracks.

According to a report by BNY Mellon analysts, the market has fully priced in a rate cut by the Federal Reserve this month. However, a growing consensus suggests that this will be a hawkish cut, meaning further monetary easing will depend on whether economic data released in March and June 2026 weakens or inflation falls further. The analysts also noted that the upcoming change of Fed chair poses a risk, as the market will assess the policy inclinations of the new leadership. Furthermore, the FOMC's dot plot is expected to confirm recent disagreements within the committee regarding policy stances. Significant divergence in committee members' views on the policy direction for 2026 is anticipated, reflecting the two-way economic risks we foresee. (Jinshi)