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28 Jan 2015
Fed likely to hike rates in June – DB
FXStreet (Barcelona) - According to Deutsche Bank, today’s FOMC meeting might result in a few small language changes, the lift-off for Fed rates would most likely be in June as long as wages show signs of rising and inflation expectations hold firm.
Key Quotes
“DB’s Peter Hooper expects that the Fed will use this meeting for some “necessary housekeeping” with just a few small language changes as he thinks the economic picture has changed moderately but not enough for any significant changes to be made.”
“To sum up, Peter expects the statement to be much like December's in which the Fed’s message was that as long as the labour market continues to show improvement and they continue to project inflation returning to 2% over the next few years (as indicated in their December forecast) the lift-off for Fed rates could begin around the middle of this year”
“Peter takes this to mean sometime between June and September and most likely June so long as (1) core PCE inflation falls at most another tenth or so in the near term, (2) wage inflation is showing signs of rising, (3) survey measures of longer term inflation expectations are holding firm, and (4) employment and unemployment continue on their recent favourable trends. He thinks that if core inflation drops by several tenths this could push the first hike out a meeting or two.”
Key Quotes
“DB’s Peter Hooper expects that the Fed will use this meeting for some “necessary housekeeping” with just a few small language changes as he thinks the economic picture has changed moderately but not enough for any significant changes to be made.”
“To sum up, Peter expects the statement to be much like December's in which the Fed’s message was that as long as the labour market continues to show improvement and they continue to project inflation returning to 2% over the next few years (as indicated in their December forecast) the lift-off for Fed rates could begin around the middle of this year”
“Peter takes this to mean sometime between June and September and most likely June so long as (1) core PCE inflation falls at most another tenth or so in the near term, (2) wage inflation is showing signs of rising, (3) survey measures of longer term inflation expectations are holding firm, and (4) employment and unemployment continue on their recent favourable trends. He thinks that if core inflation drops by several tenths this could push the first hike out a meeting or two.”