We can now reflect on the FOMC – ANZ

By FXStreet Analysts at ANZ explained that with the benefit of a couple more days and the fact that markets have settled somewhat, it is little easier now to reflect on the Fed’s decision and surprise dovishness last week.

Key Quotes:

“Certainly, in what was a generally quiet session for data on Friday, there was the odd news story of analysts highlighting confusion at the Fed’s “new” approach.

And perhaps that confusion is justified. The Fed has long told us that the pace of tightening would be data dependent. Yet when you consider that since its hike in December – where the dot plots also projected another four hikes this year – inflation (measured by the CPI or PCE deflator) is higher, as are both oil prices and inflation expectations (based on market break-evens or surveyed measures such as Friday’s Michigan measure), the unemployment rate is lower (4.9% versus 5.0%), and so is the USD.

Viewed in isolation, one could argue that the above factors should have seen the Fed actually project more hikes this year not less, or at least a number on par with what was projected in December. So the fact its dot-plots now show two fewer hikes means that something else …read more

Source:: FX Street