Fed In Wait-And-See Mode; Next Hike Likely In September


What did we learn from Fed Chair Janet Yellen? Her prepared statement contained some worries about inflation, but she later balanced things out. Here is the view from SEB:

Here is their view, courtesy of eFXnews:

SEB Research comments on Fed Yellen’s testimony before the Congress.

“Today’s testimony reinforces our view that the Fed is currently in a wait-and-see mode. It is a close call but we stick to our September hike forecast for the time being.

However, if the weakness in inflation continues we will probably push back our expectations for a hike in December unless the Fed indicates that they put more focus on the tightening labor market and disregards inflation. The inflation readings over the next few months will be decisive for the timing of the next hike.

Yellen was vague on balance sheet reduction stating in the report that it ”will likely begin…this year” and during Q&A “relatively soon”.

We still expect the Fed to decide on balance sheet reduction at the September meeting and announce a start during the fourth quarter,” SEB argues.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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