FXStreet (Barcelona) – The Barclays team shares their observations on the Fed dot-plots and the outlook for Fed rate hike, as noted by eFXnews.
Key Quotes
“The committee chose to upgrade its assessment of economic activity, in line with the stronger pace of incoming data, but leave the remainder of the statement unchanged. The committee describes economic activity as having expanded moderately, versus having slowed in the April statement.”
“Looking at the Summary of Economic Projections, the path of policy as expressed through the median of the “dot plot” flattened as we anticipated. The median funds rate in 2015 remained at 50-75bp, but the median in 2016 fell by 25bp, to 150-175bp, and the median in 2017 also ticked lower by 25bp, to 275-300bp.”
“That said, two participants now project an end-2015 funds rate of 0-25bp and five expect a target range of 25-50bp. In other words, seven participants expect no rate hike or only one rate hike this year, as opposed to April, when only three participants expressed this view.”
“Therefore, even though the policy path flattened and the median expectation is for two rate hikes in 2015, the updated set of projections suggests some slippage past a September take-off. We believe this occurred since the central tendency for growth has been revised lower and unemployment higher in 2015. Some participants may feel this warrants fewer rate hikes in the near term.”
This content has been provided under specific arrangement with eFXnews.
(Market News Provided by FXstreet)