28 Mar 2016
A soft Fed but a firming US economy – BNZ
Research Team at BNZ, notes that the US Fed has slashed dot-point forecasts by 50bps for 2016/17 (and its longer-term terminal rate lowered 25bps to 3.25%).
Key Quotes
“Fed is now likely to sit less above market pricing and all in spite of decent growth, firming inflation. After a soft end to 2015, US activity indicators have stabilised or shown improvement. Economic growth in 2016 is expected to be moderate, but sufficient for the unemployment rate to continue falling.
While we (still) expect the next rate hike will be in the September quarter, the chance of a June quarter hike cannot be dismissed out of hand, as core inflation keeps rising.”
Key Quotes
“Fed is now likely to sit less above market pricing and all in spite of decent growth, firming inflation. After a soft end to 2015, US activity indicators have stabilised or shown improvement. Economic growth in 2016 is expected to be moderate, but sufficient for the unemployment rate to continue falling.
While we (still) expect the next rate hike will be in the September quarter, the chance of a June quarter hike cannot be dismissed out of hand, as core inflation keeps rising.”