FOMC preview: Fed should wait before next rate hike - Danske Bank
Analysts from Danske Bank expect the Federal Reserve to keep rates unchanged on Wednesday and consider that they should wait for confirmation that recent data weakness is temporary.
Key Quotes:
“We stick to our view that the Fed will skip hiking at the upcoming meeting and instead announce the triggers for quantitative tightening (QT), as a datadependent Fed should wait at least one meeting to confirm that recent weakness is only temporary.”
“However, given the high expectations of a June hike, the Fed may have painted itself into a corner, as high expectations have weighed on the Fed’s decision before.”
“If the Fed hikes in June, we do not expect an announcement on QT. Instead, we expect it to be postponed until the September meeting. We still think the third hike is most likely in December.”
“We expect unchanged ‘dots’ signalling three hikes per year and see limited chance of a hawkish surprise.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
