Fed: Doubts about three hikes this year - Rabobank

Philip Marey, Senior US Strategist at Rabobank, still have doubts about whether the Fed hike three times this year?

Key Quotes

“In the first place, the failure of the American Health Care Act supports our view that the timing, size and impact of the much vaunted fiscal policy plans that are boosting the confidence of investors, consumers and businesses are likely to disappoint. In the second place, protectionist policy measures (including a possible border adjustment in the new tax plan) could cause trade conflicts that would also have a negative impact on the US economy and markets. In the third place, the global economy may have some negative surprises in store for the Fed, which now sees less risk from overseas.”

“Global growth is weak to begin with, and could be undermined further by protectionist tendencies around the world or adverse effects from rising USD interest rates. Meanwhile, China remains a downside risk to the global economy, and the same is true for developments in Europe. In our view, the probability of at least one accident occurring before the end of the year is larger than 50%. Therefore, we think that two hikes may be more realistic.”