17 Jun 2015
Goldman Sachs: September rate hike likely but Fed might preserve optionality – eFXnews
FXStreet (Barcelona) - The Goldman Sachs Team believes that although the FOMC statement might confirm a tilt towards September for a rate hike, the data dependent Fed might preserve some optionality, as noted by eFXnews.
Key Quotes
“The overarching message from the meeting will probably be that September remains the Committee’s baseline expectation for the start of monetary tightening, reflecting cumulative progress in the recovery over the last six years.”
“While September remains our baseline as well, we think that the FOMC will want to preserve optionality at the June meeting, and there is still a significant probability that the hiking cycle will not begin until December or later.”
“We expect the content of the Summary of Economic Projections (SEP)—released coincident with the FOMC statement—to be updated to reflect the recent economic data. The unemployment rate path will likely be slightly higher in the near term, while long-term views on the natural rate of unemployment may come down further. Participants’ assessment of the inflation outlook will probably be little changed.”
“Most importantly, we think that both the median and modal “dot” will remain at 0.625% for 2015, consistent with two twenty five basis point hikes this year (beginning in September). However, most other aspects of the dot plot will probably show a dovish shift, reflecting softer H1 activity and the Fed’s “data dependent” mantra.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“The overarching message from the meeting will probably be that September remains the Committee’s baseline expectation for the start of monetary tightening, reflecting cumulative progress in the recovery over the last six years.”
“While September remains our baseline as well, we think that the FOMC will want to preserve optionality at the June meeting, and there is still a significant probability that the hiking cycle will not begin until December or later.”
“We expect the content of the Summary of Economic Projections (SEP)—released coincident with the FOMC statement—to be updated to reflect the recent economic data. The unemployment rate path will likely be slightly higher in the near term, while long-term views on the natural rate of unemployment may come down further. Participants’ assessment of the inflation outlook will probably be little changed.”
“Most importantly, we think that both the median and modal “dot” will remain at 0.625% for 2015, consistent with two twenty five basis point hikes this year (beginning in September). However, most other aspects of the dot plot will probably show a dovish shift, reflecting softer H1 activity and the Fed’s “data dependent” mantra.”
This content has been provided under specific arrangement with eFXnews.