Fed preview: Rates to go up 25bp but some anxiety over press conference warranted – ING

By FXStreet FXStreet (Delhi) – Research Team at ING, suggests that the markets are as near certain about the first 25bp rate hike in this cycle as is ever the case.

Key Quotes

“The data has been supportive recently, and there has been little, if any, commentary from Fed speakers introducing any sense that this is not already a done deal. But there is still scope for markets to react on the day. As Yellen has been keen to stress in previous meetings, the timing of the first hike is less important than what happens thereafter, so what is likely to be key at this meeting, is the message Yellen delivers about the pace and extent of tightening that is to follow. We outline what we see as the four plausible scenarios, with some rough subjective probabilities (though we see two of these as very unlikely).

Scenario 1: Most likely (say 70% probability)

The Fed hikes the target range from 0-25bp to 25-50bp, and Janet Yellen stresses that “..economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run”. This is the text used in the last statement, and one that …read more

Source:: FX Street