Fed: Expectations beyond March? - Rabobank

Analysts at Rabobank explained that in response to the Fed’s coordinated effort to raise market expectations we also adjusted our forecasts last week by adding a March rate hike to our outlook for 2017, which until then consisted of a single hike in December. 

Key Quotes:

"Although we note an upward risk to our new baseline of an additional hike in June or September, we still have our doubts about the Fed’s plans to hike 3 times this year. After all, any kind of negative event could stop the Fed in its tracks and slow down the hiking cycle. In the first place, the timing, size or impact of the much vaunted fiscal policy plans could disappoint. In the second place, protectionist policy measures (including a possible border adjustment in the new tax plan) could cause trade conflicts that would also have a negative impact on the US economy and markets."

"In the third place, the global economy may have some negative surprises in store for the Fed, which appears to see less risk from overseas. Global growth is weak to begin with, and could be undermined further by protectionist tendencies around the world or adverse effects from rising USD interest rates. Meanwhile, China remains a downside risk to the global economy, and the same is true for developments in Europe. We still think that the probability of reaching the end of the year without an accident is smaller than 50%."