What to expect from FOMC? - Deutsche Bank

In one of the most effective episodes of Fed communication in recent memory, members of the FOMC turned market expectations around and removed essentially all doubt that a 25 bp rate hike would occur this week notes analyst at Deutsche Bank.

Key Quotes

“The main question that remains is just how hawkish the message that accompanies this policy move will be. Will the Committee strive to boost market expectations of additional rate hikes in the near term significantly further?”

“DB's Peter Hooper thinks the quick is no, most likely not. Inflation is still well behaved, running a little below target. And there is still more than enough uncertainty about what will transpire elsewhere in Washington to keep the Fed very much on its course of a “gradual” ascent for now. While growth prospects have improved and some dots will move up; the median dot should remain at three increases this year. That said, the risks around this view are skewed to the upside.”