Back
23 Feb 2015
June is still preferred for the first rate hike by the Fed – Danske Bank
FXStreet (Edinburgh) - Analysts at Danske Bank expect the Fed to start its hiking cycle in June.
Key Quotes
“The Fed will need to balance its dual mandate this year, with the labour market improving fast but core inflation running below the 2% target”.
“The January FOMC minutes showed that there is no consensus on the appropriate lift-off date. We believe the Fed will ultimately attach more weight to labour market improvement and see through the current low level of inflation”.
“History has shown that wage inflation is not a good measure of labour market slack. Postponing rate hikes until wages are rising risks falling behind the curve”.
“Optimal control models are used as an input in the FOMC’s discussion of rate decision. These models suggest a fed funds rate of 0.5% in Q1”.
“Given our forecast of continued solid job growth, we expect the Fed to start a gradual rate hike cycle this summer, most likely with a first hike in June”.
Key Quotes
“The Fed will need to balance its dual mandate this year, with the labour market improving fast but core inflation running below the 2% target”.
“The January FOMC minutes showed that there is no consensus on the appropriate lift-off date. We believe the Fed will ultimately attach more weight to labour market improvement and see through the current low level of inflation”.
“History has shown that wage inflation is not a good measure of labour market slack. Postponing rate hikes until wages are rising risks falling behind the curve”.
“Optimal control models are used as an input in the FOMC’s discussion of rate decision. These models suggest a fed funds rate of 0.5% in Q1”.
“Given our forecast of continued solid job growth, we expect the Fed to start a gradual rate hike cycle this summer, most likely with a first hike in June”.