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19 Mar 2015
Fed opens the door for a rate hike in mid-2015 – UOB Group
FXStreet (Edinburgh) - Analysts at UOB Group assessed the recent FOMC meeting and the prospects of a rate hike by mid-year.
Key Quotes
“The key event on Wednesday (18 March 2015) was the FOMC meeting and the Fed Reserve as widely expected chose the drop the commitment to be “patient in beginning to normalize the stance of monetary policy,” opening the door towards increasing short term interest rates in mid-2015”.
“That said, the overall tone of the Fed statement was cautious in its approach to rate normalization and markets interpreted that as DOVISH”.
“Dropping the pledge to be “patient” marks a shift away from the explicit calendar-based guidance on the future policy path to be more data-dependent guidance”.
“But the markets were less fearful of rate hikes because of the Fed’s lower growth outlook, significant downward revisions in inflation outlook & the expected slack in the labor market to persist for quite a while with the job market having more room to improve even with unemployment currently at a 7-year low”.
“And even if the hikes were to come in 2015, the market’s view is that the hikes will be more gradual than in previous rate hike cycles, and that reinforced the dovish sentiment”.
Key Quotes
“The key event on Wednesday (18 March 2015) was the FOMC meeting and the Fed Reserve as widely expected chose the drop the commitment to be “patient in beginning to normalize the stance of monetary policy,” opening the door towards increasing short term interest rates in mid-2015”.
“That said, the overall tone of the Fed statement was cautious in its approach to rate normalization and markets interpreted that as DOVISH”.
“Dropping the pledge to be “patient” marks a shift away from the explicit calendar-based guidance on the future policy path to be more data-dependent guidance”.
“But the markets were less fearful of rate hikes because of the Fed’s lower growth outlook, significant downward revisions in inflation outlook & the expected slack in the labor market to persist for quite a while with the job market having more room to improve even with unemployment currently at a 7-year low”.
“And even if the hikes were to come in 2015, the market’s view is that the hikes will be more gradual than in previous rate hike cycles, and that reinforced the dovish sentiment”.