9 Apr 2015
Fed rate normalization expected to begin in June – UOB
FXStreet (Barcelona) - With US growth expected to rebound in Q2 and wage pressures building, a Fed rate hike in June is highly likely, predicts UOB Group.
Key Quotes
“Expectations for the Fed Reserve’s first rate hike have been rolled back following a dovish March FOMC, a repeat of weak GDP in 1Q-2015 and a plunge in US March job creation.”
“We (UOB) have not changed our Fed rate normalization timetable and we still expect the Fed rate normalization to take place in 16-17 June 2015 FOMC based on: 1) Expected growth rebound in 2Q & 3Q-2015 (similar to 2014), 2) Increasing US domestic wage pressure, and 3) The US Fed Reserve’s desire to get away from the prolonged state of being stuck in zero-interest rate environment.”
“While we still see downside risks to the majors & Asian FX, we are making slight adjustments to our FX forecasts as we are now expecting a more moderate USD appreciation going forward.”
Key Quotes
“Expectations for the Fed Reserve’s first rate hike have been rolled back following a dovish March FOMC, a repeat of weak GDP in 1Q-2015 and a plunge in US March job creation.”
“We (UOB) have not changed our Fed rate normalization timetable and we still expect the Fed rate normalization to take place in 16-17 June 2015 FOMC based on: 1) Expected growth rebound in 2Q & 3Q-2015 (similar to 2014), 2) Increasing US domestic wage pressure, and 3) The US Fed Reserve’s desire to get away from the prolonged state of being stuck in zero-interest rate environment.”
“While we still see downside risks to the majors & Asian FX, we are making slight adjustments to our FX forecasts as we are now expecting a more moderate USD appreciation going forward.”