29 Jan 2015
Fed more hawkish than dovish – BBH
FXStreet (Barcelona) - According to the Brown Brothers Harriman Team, the reaction in the FX and Equity space suggests that the Fed’s statement was hawkish, adding that Fed remains right on track for a probable mid-year hike.
Key Quotes
“As we expected, the FOMC meeting was a non-event. Policy was kept steady, and the Fed retained “patient” with regards to starting the tightening cycle. Note that the two dissents from December (Fisher and Kocherlakota) are not on the FOMC in 2015. Thus, this vote was unanimous.”
“Looking at the side-by-side comparisons with the December statement, economic activity was upgraded from "moderate" to "solid" while jobs growth was upgraded from "solid" to "strong.” It added a new phrase about "international developments" that suggests a possible delay to rate hikes.”
“But short of full-blown crisis in the rest of the world, we don't think the Fed will alter their timeline very much. If we had to characterize this statement, we'd say it leans more towards being hawkish than being dovish.”
“It’s worth noting that the dollar ended Wednesday at or near the highs against most of the majors and EM, the yen being the main exception. With the dollar maintaining or extending those gains, we think our hawkish take is the right one. That is, the Fed has upgraded growth and jobs outlooks, and remains on track to hike near mid-year.”
“US equities ended Wednesday near the lows and futures are pointing to a lower open today, also suggestive of a more hawkish Fed take.”
Key Quotes
“As we expected, the FOMC meeting was a non-event. Policy was kept steady, and the Fed retained “patient” with regards to starting the tightening cycle. Note that the two dissents from December (Fisher and Kocherlakota) are not on the FOMC in 2015. Thus, this vote was unanimous.”
“Looking at the side-by-side comparisons with the December statement, economic activity was upgraded from "moderate" to "solid" while jobs growth was upgraded from "solid" to "strong.” It added a new phrase about "international developments" that suggests a possible delay to rate hikes.”
“But short of full-blown crisis in the rest of the world, we don't think the Fed will alter their timeline very much. If we had to characterize this statement, we'd say it leans more towards being hawkish than being dovish.”
“It’s worth noting that the dollar ended Wednesday at or near the highs against most of the majors and EM, the yen being the main exception. With the dollar maintaining or extending those gains, we think our hawkish take is the right one. That is, the Fed has upgraded growth and jobs outlooks, and remains on track to hike near mid-year.”
“US equities ended Wednesday near the lows and futures are pointing to a lower open today, also suggestive of a more hawkish Fed take.”