After the FOMC March meeting, analysts from Wells Fargo, now project just two rate increases this year, down from their previous forecast of three hikes.
Key Quotes:
“Uncertainties abound and in that situation caution is the watchword. While the job market looks solid and the risk of recession has diminished in the Fed’s view, the strength of the economy remains uncertain.”
“The assessment of the current economic backdrop was upgraded since the January meeting, with the Fed noting that labor market conditions and the housing sector continue to improve, while household spending increased at a moderate pace. The upgraded assessment of current conditions was tempered, however, by the acknowledgement of risks posed by global economic and financial developments.”
“Whatever the economic model, the pace of real economic growth in this expansion has been disappointing given the extent of accommodative monetary policy. The FOMC is getting far less growth for a buck of easing than was expected. From our viewpoint, this suggests further caution on the part of the FOMC as it evaluates future rate increases.”
“We, as the FOMC, remain data dependent. Taking into account the Fed’s updated outlook, we now project just two 25 bps rate increases this year, down from our previous forecast of three hikes.”
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