9 Apr 2015
Fed hike likely in September – Danske
FXStreet (Barcelona) - Signe Roed-Frederiksen, Senior Analyst at Danske Bank, argues that the FOMC Minutes suggesting that most members remain in favour of a sooner hike, but the March payrolls number released post the meeting would have likely shifted the rate hike expectations among members ahead, and hence favours a September rate hike.
Key Quotes
“The amount of new information in the FOMC minutes was limited. However, they did confirm that there is quite a large disparity of views between individual FOMC members on the necessary conditions for delivering a first rate hike.”
“It is interesting to us that the minutes state that ‘in a context of progress towards maximum employment and reasonable confidence that inflation will move back to 2% over the medium term, the normalisation process could be initiated prior to seeing increases in core price inflation or wage inflation’.”
“The minutes also showed that ‘several’ judged a June rate hike to be warranted; a couple saw the first rate hike in 2016 and the rest later this year. Several should be more than five but, …the individual projections suggest that it is at most seven. Note, however, that only two or three of these should be voting members of the FOMC this year.”
“With the March employment report on the weak side of expectations, some of these members are likely to have pushed their preferred date of lift-off slightly into the future.”
“We continue to see the September FOMC meeting as the most likely time for a first rate hike.”
Key Quotes
“The amount of new information in the FOMC minutes was limited. However, they did confirm that there is quite a large disparity of views between individual FOMC members on the necessary conditions for delivering a first rate hike.”
“It is interesting to us that the minutes state that ‘in a context of progress towards maximum employment and reasonable confidence that inflation will move back to 2% over the medium term, the normalisation process could be initiated prior to seeing increases in core price inflation or wage inflation’.”
“The minutes also showed that ‘several’ judged a June rate hike to be warranted; a couple saw the first rate hike in 2016 and the rest later this year. Several should be more than five but, …the individual projections suggest that it is at most seven. Note, however, that only two or three of these should be voting members of the FOMC this year.”
“With the March employment report on the weak side of expectations, some of these members are likely to have pushed their preferred date of lift-off slightly into the future.”
“We continue to see the September FOMC meeting as the most likely time for a first rate hike.”