Goldman Sachs – FOMC preview: Watch the long-run target rate for USD direction

Goldman Sachs posted a preview on the FOMC decision via Bloomberg, noting that the Fed could downgrade its long-run target rate.

Key Points:

Expect the Fed to downgrade long-run target rate of its hiking cycle by 25 bps to 3%

This would lead to a weaker USD

It would be 3rd time since September of 2015 the Fed has cut its long-run target rate

If the long-run target rate is left unchanged, it could signal Fed isn't re-evaluating policy normalization & could lead to a USD rally in coming weeks

Another positive for the USD would be if the Brexit vote was 'remain'

Jun 15, 2016

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