FOMC: June rate hike doors closed after NFP – Danske

By FXStreet According to Mikael Olai Milhøj, Senior Analyst at Danske Bank, the Non-farm payroll report in the US was the weakest in seven months and closed the doors for a rate hike at the next FOMC meeting in June.

Key Quotes:

“Recently four Fed members said the door is open to a hike in June, but we think the weak employment growth in April has closed it. Bullard, Williams, Kaplan and Lockhart all said in separate remarks that the Fed may hike at the June FOMC meeting but that it depends on incoming data. While their comments are interesting, we think it is important to remember that most of the voting FOMC members have a dovish stance on monetary policy. In addition, Fed chair Yellen emphasised the downside risks to the economy in her last speech.”

“In our view, the Fed will wait with hiking until the FOMC meeting in September, which would give it more time to judge incoming data and we will also be past the UK’s EU referendum. A hike in June is priced with a probability of around 10% down from 20% a month ago, while a hike in September is priced with a probability below 40%.”

“However despite …read more

Source:: FX Street