FOMC Preview: We expect a dovish FED – Danske

By FXStreet FXStreet (Córdoba) – Analysts from Danske Bank explain that on Wednesday, the Federal Reserve will leave rates unchanged and the focus is likely to be on the statement.

Key Quotes:

“We expect the Fed to be dovish by communicating implicitly that it will skip March and remain patient in the current environment. The main reasons are the weak US data, depressed markets and subdued core inflation.”

“Our current view is that the Fed will increase the Fed funds target rate three times this year (April, September and December) but the downside risks to this call have definitely increased. The Fed will not risk tightening too much, too quickly, in our view.“

“Markets have priced in one full hike this year and one next year.”

“Since the December meeting, there have only been a few Fed speeches. Most notable was the speech by James Bullard (voter, hawk) in which he expressed his concerns about the falling inflation expectations. Although the turmoil has continued, his comments gave some relief to the markets on that day, suggesting that markets also worry that the Fed might tighten too much too quickly, especially since US data has disappointed recently.”

“Although we expect the FOMC to communicate that it is …read more

Source:: FX Street