US GDP Q4: One reason for the Fed to remain on hold – Danske

By FXStreet FXStreet (Córdoba) – According to analysts from Danske Bank, the slower growth that took place in the US economy during the fourth quarter is another reason for the Federal Reserve to leave rates unchanged in March. They still expect a rate hike in April.

Key Quotes:

“We expect the US to continue to grow at a moderate pace this year. However, since oil investments will probably continue to drag down growth for some time and the manufacturing sector is still struggling, it depends almost solely on US consumers.”

“The first estimate confirmed that the Fed increased the Federal funds rate at the same time as the economy slowed, which the FOMC statement from the meeting held earlier this week also recognised. However, the labour market is key to understanding why the Fed made the initial lift-off as the labour market is more or less back to ‘normal’ as the Fed lives in a Phillips curve world. This said, slower GDP growth in Q4, weak manufacturing data, subdued core inflation low market inflation expectations and financial market turmoil explain why the Fed was relatively dovish in the latest FOMC statement. “

“While today’s release supports our view that the Fed will stay …read more

Source:: FX Street