FXStreet (Delhi) – Aneta Markowska, Research Analyst at Societe Generale, suggests that the wait was painful or even torturous, yet in the end the FOMC managed to engineer a very smooth lift-off.
Key Quotes
“The message delivered was broadly in line with expectations, with the FOMC’s rate projections showing a modestly slower path in 2017/18. The statement and press conference underscored gradualism and tied further moves not only to cyclical, but also to slow-moving structural forces.”
“What will be the Fed’s next move? Chair Yellen indicated that in order to hike again, the FOMC needs to see inflation evolve in line with its forecast. Importantly, it does not need to reach 2%. The FOMC expects core PCE to end the year at 1.3% (i.e. at current level) and to rise to 1.6% next year; and the headline to be at 0.4% and 1.6% respectively. In this context, the hurdle for a March rate hike appears to be quite low. We currently expect three hikes next year which is below the FOMC median forecast, but in line with the dots assumed to represent the group’s core.”
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