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(Bloomberg) -- FOMC’s rate projections are seen as drawing more attention than any balance-sheet announcement Wednesday, based on published research by analysts; tapering of Fed’s $4.47t portfolio is seen as a given, with rates expected to remain unchanged for now.   

• RBC sees potential for 2020 median dot to show Fed’s tightening cycle is coming to an end; FTN, Morgan Stanley say long-run dot could fall to 2.75% from 3%
• NOTE: Traders have boosted the odds of a hike by December to ~50%; MBS analysts retain recommendations amid expectations that Fed will announce balance-sheet unwind on Wednesday

BofA (Michelle Meyer, others)

• Any shift lower in 2019 or longer-run dots would support a steeper curve, given potential for a more patient Fed to allow for a shift upward in inflation
• Real question is when the Fed will hike again and whether it will continue raising rates over next two years
• MORE

ING (Viraj Patel)

• Fed’s dot plot will likely reflect a reduced conviction on the pace and extent of future tightening
• More policy makers are likely to predict no more hikes this year, while 2018 and longer-run dots may move lower
• USD will resume weakening after FOMC meeting
• MORE

Morgan Stanley (Matthew Hornbach, others)  

• Lower median long-run dot is the biggest risk to call by Morgan Stanley economists for status quo; dot could fall to 2.75% from 3%  
• Next biggest risk is a lower median 2018 dot, which could fall to 1.875% from 2.125%, followed by possibility that Yellen takes a “more dismissive line” toward downside surprises in inflation data 
• Balance-sheet normalization should attract the least amount of attention
• Investors should enter tactical UST 2s30s flatteners, given risks to outcome of FOMC meeting

FTN (Chris Low)  

• Long-run dot could drop to 2.75% from 3% if just two participants shift expectations a quarter-point lower
• More likely that the 2017 dot will stay the same and the 2018, 2019 and long-run dots will shift
• Combined message of Fed’s summary of economic projections and Yellen’s press conference will tilt dovish

JPM (Michael Feroli)

• Dots will be “most-watched development” of meeting
• While more FOMC participants may expect no more hikes this year relative to June forecasts, it won’t be enough to bring down median dot
• Fed will continue to be at odds with current market pricing for 2018-2019 outlook; see MORE
• In separate note, strategists led by Matthew Jozoff said a JPM survey of MBS investors found they have a “nonchalant attitude” toward Fed’s tapering

Market Securities (Christophe Barraud)  

• Statement and shift lower in inflation projections for 2017 could send a dovish signal  
• Third rate increase this year is likely to still be reflected in dot plot; however, Yellen will probably be cautious in her press conference about the prospect of another hike in 2017
• Inflation assessment is likely to be downgraded again, given recent weakness wasn’t due to just transitory factors

Pictet Wealth Management (Thomas Costerg)  

• Fed will probably hike by quarter-point in December and again in March; “beyond that, the outlook gets muddier”
• “The Fed’s dots are too optimistic, especially beyond 2018”
• Some policy makers will probably reduce their expectations for terminal rate of this tightening cycle; median dot for terminal rate could drop to 2.75%

RBC (Tom Porcelli, Jacob Oubina, Michael Cloherty)  

• Release of 2020 dot for first time raises question of whether policy makers will show tightening cycle coming to an end
• Cycle could effectively end with fed funds rate at 2.9% in 2019 or 3% in 2020; alternatively, policy makers might show hikes beyond 3% neutral rate in 2020  
• MORE

Wrightson ICAP (Lou Crandall)

• Big question is how Fed will frame debate about possible hike in December
• Fed should tighten again in December, but data may not let policy makers do it
• MORE

--With assistance from Alexandra Harris and Alexandria Arnold. To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Greg Chang

--CLEMENTINE FLETCHER

(Bloomberg) -- Following are forecasts for today’s economic releases as compiled by Bloomberg News.

• Housing Starts 1174k; range 1075k to 1225k (72 estimates)
• Starts 1.6% m/m; range -6.9% to 6.1% (72 estimates)
• Build Permits 1220k; range 1120k to 1280k (47 estimates)
• Permits -0.8% m/m; range -8.9% to 4.1% (47 estimates)
• “Housing starts likely rebounded in August, given the scale of the previous month’s decline. Hurricane Harvey, which disrupted construction activity in Texas, will at least partially impair the strength of the expected rebound”: Bloomberg Intelligence
• In July, starts dropped 4.8 percent to 1.155 million at an annual rate
• Current Acct. $-116b; range $-122.7b to $-108.4b (27 estimates)
• Import prices 0.4% m/m; range 0% to 1% (37 estimates)
• Import prices ex petro 0.2% m/m; range 0% to 0.2% (6 estimates)
• Import Prices 2.2% y/y; range 1.5% to 2.5% (10 estimates)
• Export Prices 0.2% m/m; range -0.1% to 0.5% (11 estimates)
• “Oil prices were only up marginally (less than 3.0% from July), so energy should be only a marginal factor. Nonfuel import inflation has been quiescent recently, advancing only 0.9% over the last 12 months”: Bloomberg Intelligence
• In July, import prices rose 0.1 percent, the first increase in three months

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net; Vincent Del Giudice in Denver at vdelgiudice@bloomberg.net To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net Kristy Scheuble