Fed lift-off: December’s more likely – Rabobank

FXStreet (Edinburgh) – Senior Strategist Philip Marey at Rabobank believes the Fed could hike rates in December instead of September.

Key Quotes

“As widely expected, the Fed did not offer any code word for an imminent rate hike”.

“However, the Fed did indicate that we are getting closer to the first rate hike, as they added ‘some’ to the further improvement in the labor market that the Committee wants to see before lift-off”.

“What’s more, the Committee still sees the risks to the outlook for economic activity and the labor market as ‘nearly’ balanced, and did not upgrade this to risks being ‘roughly equal’ as it did in 2004 before the start of the previous hiking cycle. This means that the FOMC is still concerned about the downside risks to its current outlook for the economy”.

“All’n all, while a September rate hike remains a distinct possibility, we still have our doubts and we continue to attach a higher probability to a December lift-off. We think that the FOMC, which has a large dovish majority, would like to see more evidence of strength in the economy and ‘reasonable confidence’ that inflation is moving back to target than the data are likely to provide before the September meeting”.

Senior Strategist Philip Marey at Rabobank believes the Fed could hike rates in December instead of September…

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