You are not logged in.

#1 18-12-2018 07:42:17

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2796

FOMC: the Fed will likely raise rates again... (Danske Bank)

FOMC: the Fed will likely raise rates again, but what will be the new forward guidance? (Danske Bank)

Danske Bank expects the Fed to raise rates again this week, bringing the target range to 2.25-2.50%, the lower end of the broad neutral rate range (2.5-3.0%, with most saying 3.0%).

"While we believe the Fed's baseline scenario remains that the gradual rate hike cycle will continue, the Fed will likely increasingly withdraw from its forward guidance in order to increase its flexibility (as it did in June), so that the risks for the rate outlook become two-way with the federal funds rate in the broad neutral range. Do not be surprised if the Fed removes "expecting further gradual increases in the target range" from its statement. It makes sense to get rid of the unilateral rate outlook as monetary policy is becoming more neutral.

We believe that the Fed will continue to signal three rate hikes next year, but we see a risk of lowering the 2020 and 2021 targets. The longer-term outlook should remain unchanged at 3.00%.

We still think the Fed is on track to reach 3.00% by raising rates in March and June. The Fed could raise them again in the second half of 2019, but this is less certain.

"Anything worth having is worth going for - all the way." - J.R. Ewing



Board footer