29 Jan 2015
US rate hike likely to come later this year – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, views the Fed’s statement to be USD supportive, expecting a rate hike likely during later this year.
Key Quotes
“The Fed dropped “considerable time” and kept “patient” in the FOMC statement, much as expected. The key takeaway here is that policy makers are edging closer to rate lift-off—the economy is expanding at a “solid” pace (our US colleagues pointed out that this was the first time they have used this description since the recession) which is a clear improvement from the “moderate” characterization previously.”
“The jobs outlook was “nearly balanced” and while inflation was dropping below the Fed’s long run goal, policy makers still expect inflation to rise gradually towards 2%.”
“The Fed said it would weigh “international developments” when setting policy—which the markets took as a dovish signal—but it is not clear that external events would be an impediment to the Fed tightening if it thought domestic economic conditions warranted it.“
“The statement supports our view that rate increases are more likely to come later this year (rather than June, for example) - but the contrast with other major central banks that are easing (or shifting to neutral) is clear and still USD-supportive overall.”
Key Quotes
“The Fed dropped “considerable time” and kept “patient” in the FOMC statement, much as expected. The key takeaway here is that policy makers are edging closer to rate lift-off—the economy is expanding at a “solid” pace (our US colleagues pointed out that this was the first time they have used this description since the recession) which is a clear improvement from the “moderate” characterization previously.”
“The jobs outlook was “nearly balanced” and while inflation was dropping below the Fed’s long run goal, policy makers still expect inflation to rise gradually towards 2%.”
“The Fed said it would weigh “international developments” when setting policy—which the markets took as a dovish signal—but it is not clear that external events would be an impediment to the Fed tightening if it thought domestic economic conditions warranted it.“
“The statement supports our view that rate increases are more likely to come later this year (rather than June, for example) - but the contrast with other major central banks that are easing (or shifting to neutral) is clear and still USD-supportive overall.”