18 Jun 2014
Markets expect a hawkish Fed – Danske Bank
FXStreet (Edinburgh) - According to Sverre Holbek, Senior Analyst at Danske Bank, the tone of today’s FOMC gathering would be tilted to the hawkish side.
Key Quotes
“The Fed will take centre stage today with its statement, new projections and press
conference by Fed chairman Janet Yellen”.
“Overall we see the risk skewed towards the slightly hawkish side. It is likely that the Fed will revise down the unemployment forecast which currently stands at 6.2% by end-2014 – only slightly below the current rate of 6.3%”.
“Inflation will also be in focus – not least after yesterday’s upside surprise to core inflation in May”.
“The Fed is likely to change to a less dovish tone on inflation where it has for some time stressed downside risks”.
“A key focus will also be the ‘dots’ of Fed funds rate projections from each member. The median projection at the March meeting was 1.0% at end-2015 and 2.25% at end-2016. However, it only takes very few members to shift the median projection so we could see a change here without too many members altering their forecast”.
Key Quotes
“The Fed will take centre stage today with its statement, new projections and press
conference by Fed chairman Janet Yellen”.
“Overall we see the risk skewed towards the slightly hawkish side. It is likely that the Fed will revise down the unemployment forecast which currently stands at 6.2% by end-2014 – only slightly below the current rate of 6.3%”.
“Inflation will also be in focus – not least after yesterday’s upside surprise to core inflation in May”.
“The Fed is likely to change to a less dovish tone on inflation where it has for some time stressed downside risks”.
“A key focus will also be the ‘dots’ of Fed funds rate projections from each member. The median projection at the March meeting was 1.0% at end-2015 and 2.25% at end-2016. However, it only takes very few members to shift the median projection so we could see a change here without too many members altering their forecast”.