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16 Mar 2015
FOMC to drop ‘patient’ and become data-dependent – KBC
FXStreet (Barcelona) - With FOMC meeting this week, the KBC Bank Research Team views that the Fed might drop ‘patient’ and shift to becoming fully data-dependent, and also signal the markets that they would go very slow on rate hikes.
Key Quotes
“This week, markets will be focused on the FOMC meeting that starts on Tuesday and ends on Wednesday. Despite the weaker eco data in past months (apart from the payrolls), we think that the FOMC will drop its “patient” comment and become fully data-dependent.”
“This means that they revert to the usual decision-making mode of deciding at each meeting whether policy changes should be made. This would allow them to raise rates in June for the first time this cycle.”
“However, we expect them to calm markets by suggesting that in a first phase the Fed will go very slow.”
“The lingering uncertainty about the economy data, low inflation and wage data and the strong dollar will be behind their slow pace signal. Chairwoman Yellen will use the press conference to convey this signal and so might be the dots.”
Key Quotes
“This week, markets will be focused on the FOMC meeting that starts on Tuesday and ends on Wednesday. Despite the weaker eco data in past months (apart from the payrolls), we think that the FOMC will drop its “patient” comment and become fully data-dependent.”
“This means that they revert to the usual decision-making mode of deciding at each meeting whether policy changes should be made. This would allow them to raise rates in June for the first time this cycle.”
“However, we expect them to calm markets by suggesting that in a first phase the Fed will go very slow.”
“The lingering uncertainty about the economy data, low inflation and wage data and the strong dollar will be behind their slow pace signal. Chairwoman Yellen will use the press conference to convey this signal and so might be the dots.”