30 Apr 2015
June Fed rate hike doubtful – Wells Fargo
FXStreet (Barcelona) - Sam Bullard, Senior Economist at Wells Fargo Securities, comments on the FOMC meeting and further expects a September Fed rate hike to be more likely than June.
Key Quotes
“At the March FOMC meeting, Fed officials appeared to have had significant concern that inflation was too low. Since the March meeting, the modest pickup in core consumer and producer inflation has likely alleviated some of those concerns and turned attention back toward growth prospects.”
“As such, weak Q1 GDP report may have increased concerns for some Fed officials over the anticipated second quarter rebound and the trend rate of growth over the medium-term forecast horizon.”
“Fed officials will want to see the next few months’ indicator performance to better assess the underlying growth trend following the weak first quarter and to gauge whether their outlook of firming GDP growth for the remainder of this year and next remains intact.”
“Shaking off the transitory factors of winter weather and the port disruptions, we believe a moderate rebound is in store for the second quarter as growth in consumer spending and business fixed investment should pick back up.”
“We doubt there is enough time for the economy to rebound in a convincing enough way for the Fed to move in June, but there is still plenty of runway left between now and September.”
“The critical question for the Fed now is how much of the first quarter’s weakness was transitory and how much is longer lasting. This puts more weight on upcoming data, which will soften or harden the Fed’s resolve.”
Key Quotes
“At the March FOMC meeting, Fed officials appeared to have had significant concern that inflation was too low. Since the March meeting, the modest pickup in core consumer and producer inflation has likely alleviated some of those concerns and turned attention back toward growth prospects.”
“As such, weak Q1 GDP report may have increased concerns for some Fed officials over the anticipated second quarter rebound and the trend rate of growth over the medium-term forecast horizon.”
“Fed officials will want to see the next few months’ indicator performance to better assess the underlying growth trend following the weak first quarter and to gauge whether their outlook of firming GDP growth for the remainder of this year and next remains intact.”
“Shaking off the transitory factors of winter weather and the port disruptions, we believe a moderate rebound is in store for the second quarter as growth in consumer spending and business fixed investment should pick back up.”
“We doubt there is enough time for the economy to rebound in a convincing enough way for the Fed to move in June, but there is still plenty of runway left between now and September.”
“The critical question for the Fed now is how much of the first quarter’s weakness was transitory and how much is longer lasting. This puts more weight on upcoming data, which will soften or harden the Fed’s resolve.”