The Federal Open Market Committee (FOMC) is likely to keep the Federal Funds rate between 5-5.25%, as per most economists. The May US CPI data saw headline year-on-year and month-on-month surprise to the downside by 0.1 percentage point apiece, printing at 4.0% and 0.1% respectively. However, the core metrics printed in-line with forecasts at 5.3% and 0.4% respectively. Since the US CPI release, markets now price in 5% chance of a 25bps hike in June, versus a 25% chance before the CPI data, whilst chances of a July hike also ticked lower, although some 17bps of tightening in July is still priced in at the time of recording. The Fed will release an updated 'Dot Plot'. The Bloomberg survey predicts no change to the 2023 year-end rate of 5.1%. However, some expect an increase to 5.3% to amplify hawkish guidance. Consensus sees the 2024-end forecast rising to 3.8% from 3.6%, 2025 at 3.1% from 3.0%, and the long-run rate remaining at 2.5%. Concerns about further banking sector disruptions after the SVB failure, along with a downward trend in bank reserves, drive caution among doves. This could lead to a 'pause' narrative, with markets pondering when to expect cuts. Recent surprise hikes by the Reserve Bank of Australia and the Bank of Canada have raised fears that the Fed might follow. However, this seems unlikely in June, particularly following the May CPI prints.