20 Feb 2015
Fed rate hike most likely in September – BNPP
FXStreet (Barcelona) - The BNP Paribas Team notes that Yellen’s testimony and the March FOMC meeting will be the key focus for any rate signal, further adding that a September hike is likely - although clearly it is about ‘data dependency’.
Key Quotes
“Chair Yellen’s testimony before the Senate next week and the March FOMC meeting are now the key focus.”
“Next week, we expect Chair Yellen to keep all options on the table and highlight the FOMC’s data dependency.”
“From the last FOMC statement: “if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.” We are likely to hear this phrase repeated over and over in the coming months.”
“The minutes’ dovish tilt and emphasis on inflation on the back of Wednesday’s weak producer prices report gives us more confidence that the FOMC will wait for inflation and inflation expectations to bottom before lifting off. In our view, this puts September as the single most likely month – although clearly it is all about data dependency."
Key Quotes
“Chair Yellen’s testimony before the Senate next week and the March FOMC meeting are now the key focus.”
“Next week, we expect Chair Yellen to keep all options on the table and highlight the FOMC’s data dependency.”
“From the last FOMC statement: “if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.” We are likely to hear this phrase repeated over and over in the coming months.”
“The minutes’ dovish tilt and emphasis on inflation on the back of Wednesday’s weak producer prices report gives us more confidence that the FOMC will wait for inflation and inflation expectations to bottom before lifting off. In our view, this puts September as the single most likely month – although clearly it is all about data dependency."