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16 Mar 2015
Fed expected to alter its forward guidance - Deutsche Bank
FXStreet (Bali) - Joseph LaVorgna, Chief US Economist at Deutsche Bank, shares his view on the upcoming FOMC meeting, noting that the Fed is expected to alter its forward guidance.
Key Quotes
"The March FOMC meeting concluding on Wednesday will be the key event this week. The Fed will be releasing updated economic and financial forecasts alongside the meeting statement at 2:00 pm followed by a press conference with Fed Chair Yellen at 2:30 pm."
"The Fed is expected to alter its forward guidance language so as to allow the Committee the flexibility to raise interest rates sometime around the middle of this year, possibly as early as June. This could mean removing “patient” from the meeting statement."
"The Fed will also release updated economic and financial projections that should indicate a more confident outlook for the labor market, although this will likely coincide with more tepid near-term inflation forecasts."
"The diminished outlook for inflation may also be reflected in the Fed’s “dot plot”, which we expect to show a lower median forecast for interest rates in 2015."
"The interesting question will be the path thereafter, and whether or not the dots become more clustered around the previous median forecasts for 2016 and 2017."
"In her post-meeting press conference, Fed Chair Yellen will likely elaborate on the FOMC’s rationale for beginning the process of policy normalization and may provide more details on the FOMC’s reaction function for rate hiking with respect to incoming economic data."
Key Quotes
"The March FOMC meeting concluding on Wednesday will be the key event this week. The Fed will be releasing updated economic and financial forecasts alongside the meeting statement at 2:00 pm followed by a press conference with Fed Chair Yellen at 2:30 pm."
"The Fed is expected to alter its forward guidance language so as to allow the Committee the flexibility to raise interest rates sometime around the middle of this year, possibly as early as June. This could mean removing “patient” from the meeting statement."
"The Fed will also release updated economic and financial projections that should indicate a more confident outlook for the labor market, although this will likely coincide with more tepid near-term inflation forecasts."
"The diminished outlook for inflation may also be reflected in the Fed’s “dot plot”, which we expect to show a lower median forecast for interest rates in 2015."
"The interesting question will be the path thereafter, and whether or not the dots become more clustered around the previous median forecasts for 2016 and 2017."
"In her post-meeting press conference, Fed Chair Yellen will likely elaborate on the FOMC’s rationale for beginning the process of policy normalization and may provide more details on the FOMC’s reaction function for rate hiking with respect to incoming economic data."