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17 Sep 2015
FOMC: Rate hike path likely to be slow – Societe Generale
FXStreet (Delhi) – Kit Juckes, Research Analyst at Societe Generale, suggests that the FOMC will announce its policy decision at 7p.m BST, with the market priced for a 30% chance of a hike.
Key Quotes
“A clear message that a hike is ‘on its way’ is expected, so inaction today will likely only have a significant impact if the message is more dovish than that.”
“A 25bp rate hike would be a surprise to the market (though not to SG Economists) but the biggest surprise of all would be failure to lace any decision with dovish undertones. The consensus also looks for the Fed’s famous ‘dot path’ to be lowered, though we don’t think that’s likely, just yet.”
“Whatever today’s decision, the pace of rate increases from here will be slow and cautious and the final destination will be extraordinarily low relative to the peaks we have seen in the last 40-odd years (13% in 1974, 20% in 1980, 11.75% in 1984, 9.75% in 1989, 6% in 1994, 6.5% in 2000 and 5.25% in 2007).”
Key Quotes
“A clear message that a hike is ‘on its way’ is expected, so inaction today will likely only have a significant impact if the message is more dovish than that.”
“A 25bp rate hike would be a surprise to the market (though not to SG Economists) but the biggest surprise of all would be failure to lace any decision with dovish undertones. The consensus also looks for the Fed’s famous ‘dot path’ to be lowered, though we don’t think that’s likely, just yet.”
“Whatever today’s decision, the pace of rate increases from here will be slow and cautious and the final destination will be extraordinarily low relative to the peaks we have seen in the last 40-odd years (13% in 1974, 20% in 1980, 11.75% in 1984, 9.75% in 1989, 6% in 1994, 6.5% in 2000 and 5.25% in 2007).”