20 Jun 2014
First increase in rates by the Fed in H2 2015 - Nomura
FXStreet (Bali) - Following Fed's Yellen speech on monetary policy last Wednesday, Nomura Economists continue to maintain for the first increase in interest rates to come in the second quarter of 2015.
Key Quotes
"We did not expect the FOMC to indicate a notable shift in the trajectory of policy at this meeting, and that came to fruition. The basic message from the FOMC yesterday was that both the economy and the FOMC policy development process are on track."
"Consequently, we have not changed our forecast for monetary policy. We expect the FOMC to end its asset purchases in the fourth quarter and we still expect the first increase in interest rates to come in the second quarter of 2015."
"Critical judgments that underlie our policy forecast are the expectation that in coming quarters the US economy will continue to grow at about a 3% pace, that labor market performance will continue to improve, and that inflation will continue to trend higher."
"Of course, we will continue to closely monitor how Chair Yellen and other FOMC participants evaluate the outlook for the economy and progress towards their objectives. In this context, the Federal Reserve Bank of Kansas City‟s Jackson Hole Economic Symposium, which is scheduled to begin on 21 August, may be an important event. The topic this year is “Re-Evaluating Labor Market Dynamics" and Chair Yellen is scheduled to attend."
Key Quotes
"We did not expect the FOMC to indicate a notable shift in the trajectory of policy at this meeting, and that came to fruition. The basic message from the FOMC yesterday was that both the economy and the FOMC policy development process are on track."
"Consequently, we have not changed our forecast for monetary policy. We expect the FOMC to end its asset purchases in the fourth quarter and we still expect the first increase in interest rates to come in the second quarter of 2015."
"Critical judgments that underlie our policy forecast are the expectation that in coming quarters the US economy will continue to grow at about a 3% pace, that labor market performance will continue to improve, and that inflation will continue to trend higher."
"Of course, we will continue to closely monitor how Chair Yellen and other FOMC participants evaluate the outlook for the economy and progress towards their objectives. In this context, the Federal Reserve Bank of Kansas City‟s Jackson Hole Economic Symposium, which is scheduled to begin on 21 August, may be an important event. The topic this year is “Re-Evaluating Labor Market Dynamics" and Chair Yellen is scheduled to attend."