17 Jun 2015
Fed rate hike: Expect the dot-plot to be cut back – SG
FXStreet (Barcelona) - The FOMC meeting today might see the Fed dots to be cut back by 125bp, and whether it will be a dovish news or not will only be confirmed during Yellen’s press conference, according to Kit Juckes of Societe Generale.
Key Quotes
“The FOMC ‘dots’ project 2 rate hikes this year and 5 next, so a total of 1.75% in hikes by the end of 2016. The Fed Funds futures price a 1% rise in rates over the same period, and our economics team expects the dot-plot to be cut back to 125bp. Is the market going to see this as a non-event, affirmation that too little is priced in, or a dovish signal? I rather fear the last of these may win the day but all will be clearer at 19:00 BST or, more likely after 19:30 when the press conference allows Janet Yellen to send the signal she wants. Either way, the bigger move is more likely to come in July/August as data convince people that a hike is coming.“
Key Quotes
“The FOMC ‘dots’ project 2 rate hikes this year and 5 next, so a total of 1.75% in hikes by the end of 2016. The Fed Funds futures price a 1% rise in rates over the same period, and our economics team expects the dot-plot to be cut back to 125bp. Is the market going to see this as a non-event, affirmation that too little is priced in, or a dovish signal? I rather fear the last of these may win the day but all will be clearer at 19:00 BST or, more likely after 19:30 when the press conference allows Janet Yellen to send the signal she wants. Either way, the bigger move is more likely to come in July/August as data convince people that a hike is coming.“