FXStreet (Guatemala) – Analysts at Nomura explained that one of Yellen’s main points on Friday was that the FOMC is on track to raise rates this year.
Key Quotes:
“All but two FOMC members expect at least one hike this year. While the retail sales report does lower the probability of liftoff in September, that does not mean the FOMC will wait until next year to raise rates.”
“We think the basic fundamentals for the US economy are positive. Between now and year-end we expect the economy to continue to grow at an above-trend pace, even if that is not completely clear in time for the FOMC to raise rates in September. It would be surprising, given the strength of fundamentals for US households, if the consumer was the cause of a persistent slowdown in growth. To be sure, it is somewhat more complicated to raise short-term rates for the first time in December as opposed to September.”
“The minutes to the March FOMC meeting reported that control of short-term interest rates will be a priority for the Committee around liftoff. Moreover, FOMC participants said that it would be appropriate to have an expanded RRP program in the early stages of interest rate normalization. We think that this is a good indication that the FOMC would be prepared to raise rates for the first time in December if the macroeconomic circumstances warrant it.”
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