27 Apr 2015
Fed’s rate hike could come in Q4 2015 – Rabobank
FXStreet (Edinburgh) - Philip Marey, Senior US Strategist at Rabobank, expects the first rate hike by the Federal Reserve to come towards year-end.
Key Quotes
“While at the post-meeting press conference on March 18 Chair Yellen said that the FOMC will not necessarily hike in June, and that the FOMC had become data-dependent, the minutes of the March meeting also revealed that ‘several participants (hawks) judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting.’
“At the same time the dot plot of March 18 showed that other participants (doves) expected only one or even no hike this year”.
“So while the Committee may be data-dependent, there are already strong divisions about the interpretation of the data and the likely liftoff date”.
“In our view, the March Employment Report realigned the nonfarm payrolls with other weak US economic data”.
“As we had been pointing out for some time, the Employment Reports for January and February stood in sharp contrast with other economic data. Although bad weather may be partly responsible for the slowdown, weak global growth and the strong dollar are having a more sustained impact on the US economy”.
“A premature rate hike could further undermine the economic recovery, which would slow down the return of inflation and unemployment to their targets. Therefore, we expect that the impact of weak global economic growth and the strong dollar on the US economy will delay the first hike to the final quarter of the year”.
Key Quotes
“While at the post-meeting press conference on March 18 Chair Yellen said that the FOMC will not necessarily hike in June, and that the FOMC had become data-dependent, the minutes of the March meeting also revealed that ‘several participants (hawks) judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting.’
“At the same time the dot plot of March 18 showed that other participants (doves) expected only one or even no hike this year”.
“So while the Committee may be data-dependent, there are already strong divisions about the interpretation of the data and the likely liftoff date”.
“In our view, the March Employment Report realigned the nonfarm payrolls with other weak US economic data”.
“As we had been pointing out for some time, the Employment Reports for January and February stood in sharp contrast with other economic data. Although bad weather may be partly responsible for the slowdown, weak global growth and the strong dollar are having a more sustained impact on the US economy”.
“A premature rate hike could further undermine the economic recovery, which would slow down the return of inflation and unemployment to their targets. Therefore, we expect that the impact of weak global economic growth and the strong dollar on the US economy will delay the first hike to the final quarter of the year”.