FED sent a very dovish message – Danske

By FXStreet According to analysts from Danske Bank, the decision and the statement from the Federal Reserve, was a very dovish message to the markets.

Key Quotes:

“As widely expected, the Fed maintained the Fed funds target rate unchanged at 0.25%- 0.50% (Kansas City Fed’s George dissented and voted for a hike). The projections and statement revealed a very dovish Fed, which was a relatively big surprise as we have seen an improvement in US data, a rebound in risk sentiment and higher-than-expected inflation prints recently. These three factors explain why we thought that Fed would be relatively hawkish and why we saw a repricing of the Fed in the markets in the days up to the meeting. Clearly, the Fed has signalled that it wants to avoid tightening too much, too quickly.”

“The median ‘dot’ for this year was lowered down to signalling two hikes (down from four) as the Fed thinks that ‘global economic and financial developments continue to pose risks’.”

“While the door is not yet closed for a hike in June, we (and so do the markets) think the probability has declined significantly after the meeting. Thus we stick to our view that the Fed will keep on hold until …read more

Source:: FX Street