5 Jun 2015
IMF advocated for a later Fed’s lift-off – DB
FXStreet (Edinburgh) - Jim Reid, Analyst at Deutsche Bank, reviewed the recent comments by IMF’s C.Lagarde and Fed’s D.Tarullo regarding the first rate hike by the Federal Reserve.
Key Quotes
“Back to the IMF yesterday. The fund certainly added to a slightly more dovish tone from Fed speakers recently after saying that the Fed should wait until the first half of 2016 to raise rates”.
“The IMF noted that the Fed should wait for ‘greater signs of wage or price inflation than are currently evident’ and that ‘based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016’.
“The Fund also downgraded their forecasts for US growth this year to 2.5%, from the previous 3.1% projection while taking their 2016 forecast down slightly to 3% (from 3.1%)”.
“The comments yesterday from the IMF echoed a fairly dovish Fed Governor Tarullo, who said that ‘in a broader sense, there are more questions at this point in 2015 than there were at this point in 2014’.
“He then went on to say that the Q1 weakness cannot be blamed solely on seasonality and suggested that the US economy has now lost momentum”.
“Tarullo’s comments have added to a run of more dovishly-biased comments of late, including from Evans, Brainard, Kocherlakota and Rosengren”.
Key Quotes
“Back to the IMF yesterday. The fund certainly added to a slightly more dovish tone from Fed speakers recently after saying that the Fed should wait until the first half of 2016 to raise rates”.
“The IMF noted that the Fed should wait for ‘greater signs of wage or price inflation than are currently evident’ and that ‘based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016’.
“The Fund also downgraded their forecasts for US growth this year to 2.5%, from the previous 3.1% projection while taking their 2016 forecast down slightly to 3% (from 3.1%)”.
“The comments yesterday from the IMF echoed a fairly dovish Fed Governor Tarullo, who said that ‘in a broader sense, there are more questions at this point in 2015 than there were at this point in 2014’.
“He then went on to say that the Q1 weakness cannot be blamed solely on seasonality and suggested that the US economy has now lost momentum”.
“Tarullo’s comments have added to a run of more dovishly-biased comments of late, including from Evans, Brainard, Kocherlakota and Rosengren”.