Philip Marey, Senior US Strategist at Rabobank, suggests that in recent weeks we have seen some encouraging data for the US economy that are likely to have bolstered the Fed’s confidence.
Key Quotes
“At the same time, not all the doves are convinced and they would like to see more evidence of inflation moving back toward the 2% target. This suggests that we should not expect a rate hike as early as this week, but we may see a consensus forming by the June meeting.
We stick to our call of two hikes this year, most likely one in June and another in December. Note that markets are now pricing in one hike this year, in June. However, this is only a recent insight as a few weeks ago they were not pricing in any rate hike this year.
At the same time, as wage pressures remain subdued, we do not think that the Fed will deliver the four hikes implied by the December dot plot. In fact, we may see a downward revision to three hikes in the dot plot this week.”
(Market News Provided by FXstreet)
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