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Bill Diviney, Senior Economist at ABN AMRO, suggests that today’s FOMC decision will not have any market impact as 25bp rate hike by the Fed has been close to fully priced for at least a month.

Key Quotes

“The much bigger focus will be on to what extent the recent hawkish shift among FOMC doves – evident in recent public commentary – will translate to projections for more rate hikes over the coming years. While we expect the ‘dots’ for 2018, 2019 and 2020 to shift upward, we believe this upward shift will be concentrated among doves rather than hawks, and this should keep the all-important median projections unchanged.”

“Already, the median projections are for one further rate hike this year, and an additional three hikes next year. This is somewhat more hawkish than will likely be thought necessary when the time comes, in our view (we project two rate hikes next year).”

“Unless the centrists and moderate hawks also shift their rate projections higher, we think the medians for all years will remain unchanged (2018: 1 further hike; 2019: 3 hikes; 2020: 1 hike).”

“We expect Chair Powell in his press conference to temper any overly hawkish interpretation of the ‘dots’.”