FOMC: Changes to projected policy path likely in March – BBVA

FXStreet (Delhi) – Research Team at BBVA, suggests that January’s FOMC announcement played right into their expectations for a dovish switch after December’s big policy move.

Key Quotes

“Considering the fact that we are just over a month past the first rate hike, there has been little opportunity to assess the impact in the real economy. Data releases in the coming months will be more telling, though from what we have seen so far, upcoming reports are unlikely to be overwhelmingly positive.

The problem is that the latest FOMC projections from December suggest four rate increases in 2016, meaning we may see one in March if the Fed sticks to this plan. However, our expectations are for only two increases this year, considering the time needed to assess the impact from each rate move as well as the slow and uncertain start to 2016.

Market expectations have also declined sharply in the past month, implying just one additional increase in 2016. With recent statement, the Fed has paved the way for a potential downgrade to its outlook and policy path when the time comes in March.”

Research Team at BBVA, suggests that January’s FOMC announcement played right into their expectations for a dovish switch after December’s big policy move.

(Market News Provided by FXstreet)