Fed hikes rates 25bp to 0.25%-0.5% range with no changes in 2016 projections – ING

By FXStreet FXStreet (Delhi) – Rob Carnell, Research Analyst at ING, notes that as predicted by 99 out of 102 economists on a Bloomberg survey, the Federal Reserve has raised its policy target range from 0.0%-0.25% to 0.25%-0.5%.

Key Quotes

“The statement text dealing with the change in policy states, “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent”.

The text also added, “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run”. The “gradual increases” text is new.
But for this to really be considered a “dovish hike”, it would have been useful to see the median projection of the Fed funds rate, as projected by the Reserve Board members decline.

With no change in the 2016 projection, Fed Chair, Yellen, now has an uphill struggle to make the case for this to be considered “dovish”, though as we have said before, we think …read more

Source:: FX Street