Will Yellen Give a More Hawkish Outlook ?

15 March, 2017

The Fed will announce its interest rate decision and monetary policies, at 18:00 GMT today. Later, the FOMC press conference will be held at 18:30 GMT.

Markets have been expecting a March rate hike for a period, the expectations have been largely priced in since February. Therefore, even the Fed Chair Yellen announces a rate hike today, it would be just in line with market expectations.

The Fed will probably raise rates by 25 basis points this time, to a range of 0.75% to 1%, which is the third time of a rate hike in a decade. However, now what matters more is how many times the Fed will raise rates later this year, and its latest economic projections. The Fed had projected three rate hikes in 2017 in the December FOMC meeting.

The Fed’s two objectives are maximum employment and stable prices. The recent US labour market data shows the labour market remains solid. The inflation has also seen an uptrend since August 2016.

We can expect volatility; however, the volatility might not arise from the rate decision, but more from the updated economic outlook and new projections. If the Fed Chair Yellen makes a relatively hawkish comment, then the dollar will likely keep on strengthening.

Nevertheless, if the Fed surprisingly doesn’t raise rates today, then it will also likely cause great market volatility.

The Japanese industrial production released this morning for January (YoY), reaching the highest level this year.

We will see the release of a series of UK and EU labour market data for January and February, between 09:30 – 10:00 GMR today, which will likely cause volatility to the Sterling and Euro.

It will be followed by US retail sales and CPI data for February, at 12:30 GMT, which will likely cause some volatility to the dollar and the dollar crosses, prior to the FOMC meeting.

On Thursday 16th March, there will be three central banks announce rate decisions and monetary policies. The Bank of Japan, at 02:00 GMT, followed by the Swiss National Bank, at 08:30 GMT. Finally, the Bank of England, at 12:00 GMT.

The market estimates are that the three central banks will likely keep rates unchanged.


Source link  
Bank of England Faces Conundrum

On Wednesday, data released by the UK Office for National Statistics (ONS) showed average weekly earnings (excluding bonuses) rose...

UK Inflation at 5-Year High

The likelihood of a rise in UK interest rates, for the first time in a decade, gained momentum on Tuesday as UK CPI edged up from 2.9% to 3.0%...

US Inflation Disappoints

US Consumer Price Index data was released and failed to impress the markets. With US gasoline prices spiking, following the disruption caused by the recent Hurricanes...


Can CPI Follow PPI Lead?

In early Friday trading, the markets are relatively static as they wait, in anticipation, for today’s US inflation data that will potentially give confirmation...

Fed Minutes: Inflation Conundrum

USD broadly declined as the markets digested the release of last month’s FOMC meeting minutes. Many FOMC Members are still concerned...

UK output data falls but expectations rise

On Sunday, The Confederation of British Industry released their monthly indicator of output for UK manufacturers, retailers and service companies...


US Economy Growing Faster Than Forecast

Data released on Thursday indicated that the US economy grew at a faster pace in Q2 than expected. The US Commerce Department released...

New Fiscal Year Could See Changes

With many countries entering a new fiscal year in October, many investors are summarising this past year’s portfolio performance while setting new goals...

New US data did not add positive

Published data on construction activity in the US in August slightly exceeded expectations. The number of building permits reached...

  


Share: