23 Mar 2015
Fed speech will be an important feature this week – KBC
FXStreet (Barcelona) - The KBC Bank Research Team notes that with the dovish Fed resulting in markets revising down their expectations for a rate hike, this week’s Fed speech will be key.
Key Quotes
“Last week, the FOMC downgraded its rate path while it took a step towards lifting rates for the first time in cycle. However, Yellen made clear that the Fed would be fully data-dependant. Markets, which were positioned for a less aggressive Fed reacted by further revising down their expectations.”
“We will hear from key members of the FOMC this week whether they indeed like this market reaction.”
“Markets are now positioned for a very dovish Fed until 2018.”
“Fed might have had in mind that their downward revision would bring it closer to the market, but that really didn’t happen. Time for some more hawkish talking?”
“Friday, governor Evans, a dove, said a delayed lift-off would be optimal and Fed must err on the side of less aggressive tightening. He also pleaded for a symmetrical 2% inflation target, admitting slack was shrinking.”
Key Quotes
“Last week, the FOMC downgraded its rate path while it took a step towards lifting rates for the first time in cycle. However, Yellen made clear that the Fed would be fully data-dependant. Markets, which were positioned for a less aggressive Fed reacted by further revising down their expectations.”
“We will hear from key members of the FOMC this week whether they indeed like this market reaction.”
“Markets are now positioned for a very dovish Fed until 2018.”
“Fed might have had in mind that their downward revision would bring it closer to the market, but that really didn’t happen. Time for some more hawkish talking?”
“Friday, governor Evans, a dove, said a delayed lift-off would be optimal and Fed must err on the side of less aggressive tightening. He also pleaded for a symmetrical 2% inflation target, admitting slack was shrinking.”