We have revised our Fed forecast and now no longer expect rate cuts in 2007. The target rate will remain unchanged at 5¼% for the entire year. The Fed is increasingly comfortable with the current key rate level. A less fragile growth profile has also made us rethink our forecasts – not least because of lower oil prices. The consequences of our new Fed and oil price forecasts on FX & FI developments are spelled out in this Friday Notes edition.

Further topics:

  • Weekly Comment: Euros are forever.          
  • US: Lower oil prices will drive inflation lower.          
  • Bank of Japan: Unwilling to bite the bullet?