FOMC: Hawkish hold on cards for the US central bank – Deutsche Bank

By FXStreet FXStreet (Delhi) – Alan Ruskin, Macro strategist at Deutsche Bank, suggests that all the market chatter has centered on a ‘hawkish hold’ – a cute way of saying the Fed won’t hike in September, but will leave the door wide open for a rate hike at the October meeting, most likely by emphasizing they are capable of calling a press conference after any FOMC meeting at very short notice.

Key Quotes

“There is no such thing as a ‘dovish hike‘– a surprise hike would be a huge (hawkish) change in Fed regime, showing the Yellen Fed is no longer willing to ‘baby-sit’ long risk exposure.”

“A ‘dovish hold’ is more likely than a ‘dovish and hawkish hike’ combined. The probability of this is not all that low. The Fed could well feel they can signal something about October closer to the October meeting.”

“A ‘hawkish hold’ reaction: We will know about the hold part immediately with the first headlines, and that should be helpful for risk and a small negative for the USD, given there is still a modest (~20% probability) of a 25bp hike priced in for this meeting.”

“A ‘dovish hike’ and a ‘hawkish hike’ reaction should very quickly turn into close …read more

Source:: FX Street