Fed is expected to keep its policy interest rate unchanged - TDS

Research Team at TDS, suggests that the Fed is expected to keep its policy interest rate unchanged while the post-meeting statement will remain constructive and revert to a neutral assessment of the risks.

Key Quotes

“The dot plot will solidify a hike by year-end and while the mean dots for 2017 and beyond are likely to shift lower, the number of hikes will remain unchanged. Only small revisions to the SEP expected.

A more muted market response to the Brexit shock and the expectation of firmer US growth has prompted a change in our view for the Fed to hike in December 2016 versus our prior expectation of June 2017.

We expect the Fed to be close to market expectations with a slight dovish bias. We are long 10y Treasuries heading into the meeting and expect rates to decline modestly and the 5s-30s curve to steepen.”