16 Mar 2016
FOMC likely to bring down the number of rate hikes to three - Rabobank
Bas van Geffen, Quantitative Analyst at Rabobank, suggests that although the US retail sales were therefore not the most positive, US data has overall been quite OK in our view.
Key Quotes
“This evening, the Fed gets to have a final verdict on its interpretation of recent US data. We believe that whilst data have been encouraging, some of the more dovish members of the FOMC may not yet be convinced that inflation is definitely moving back toward the 2%-target, specifically since wage pressures have been relatively subdued. With this in mind, we do not expect that the Fed will raise rates today. Instead, we may see a consensus forming for a next rate hike in June, as more evidence of inflationary pressures arises – further boosting the FOMC’s confidence.
Meanwhile the FOMC’s dot plot still includes an expectation of four rate increases this year, which –in our view- seems excessive given the subdued wage pressures. We may therefore see the FOMC bring down the number of rate hikes predicted in the dot plot to three. Our call remains for two rate hikes this year, which most likely will be in June and in December.”
Key Quotes
“This evening, the Fed gets to have a final verdict on its interpretation of recent US data. We believe that whilst data have been encouraging, some of the more dovish members of the FOMC may not yet be convinced that inflation is definitely moving back toward the 2%-target, specifically since wage pressures have been relatively subdued. With this in mind, we do not expect that the Fed will raise rates today. Instead, we may see a consensus forming for a next rate hike in June, as more evidence of inflationary pressures arises – further boosting the FOMC’s confidence.
Meanwhile the FOMC’s dot plot still includes an expectation of four rate increases this year, which –in our view- seems excessive given the subdued wage pressures. We may therefore see the FOMC bring down the number of rate hikes predicted in the dot plot to three. Our call remains for two rate hikes this year, which most likely will be in June and in December.”