28 Apr 2016
FOMC statement recognized the weaker demand - BBH
Research Team at BBH, notes that the FOMC statement recognized the weaker demand (consumption is expected to have slowed to 1.7% in Q1 from 2.4% in Q4 15) but seemed to emphasize the strength of the labor market and that associated income that can fuel consumption going forward.
Key Quotes
“Note that the Core PCE deflator in the GDP report is expected to rise from 1.3% to 1.9%, though tomorrow with the monthly report, the core PCE deflator is expected to ease to 1.5% from 1.7%.
The failure of the FOMC to reestablish a risk assessment in its statement failed to convince investors one iota that a June hike was likely. Surveys suggest economists are more enthusiastic than investors about the prospects for a hike.
We agree with the Fed’s domestic economic assessment that the economy is likely to recovery in the months ahead from the soft patch it hit over the past six months, and we expect price pressures to be steady to higher. However, our concern is that global and financial developments (which the Fed dropped as a risk but said it would continue to monitor closely) are likely to be less favorable in two months than they may appear today.”
Key Quotes
“Note that the Core PCE deflator in the GDP report is expected to rise from 1.3% to 1.9%, though tomorrow with the monthly report, the core PCE deflator is expected to ease to 1.5% from 1.7%.
The failure of the FOMC to reestablish a risk assessment in its statement failed to convince investors one iota that a June hike was likely. Surveys suggest economists are more enthusiastic than investors about the prospects for a hike.
We agree with the Fed’s domestic economic assessment that the economy is likely to recovery in the months ahead from the soft patch it hit over the past six months, and we expect price pressures to be steady to higher. However, our concern is that global and financial developments (which the Fed dropped as a risk but said it would continue to monitor closely) are likely to be less favorable in two months than they may appear today.”