Back
10 Apr 2015
FOMC minutes: Still expecting first rate hike in September
FXStreet (Bali) - North American Economists at Nomura provide their view on the minutes from the March FOMC, noting that it did not change their expectations for the trajectory of policy, still expecting the first rate hike to occur in September.
Key Quotes
"The minutes from the March FOMC meeting provided some new information about how Federal Reserve officials expect the economy and monetary policy to evolve in coming quarters. That said, the minutes did not change our expectations for the trajectory of policy."
"The FOMC made major changes to its forecasts at the March meeting. The minutes largely confirmed what we had expected regarding the rationale for those changes. Adverse winter weather, the rapid decline in oil and gas drilling activity, and the fast appreciation of the dollar between the December and March FOMC meetings all provided a significant drag on aggregate demand."
"The decline in the Committee’s forecasts for the long-term unemployment rate implied that the FOMC sees somewhat more “slack” in labor markets. The minutes also suggest that the FOMC participants have become somewhat more pessimistic about the likely trajectory of productivity over the next few years."
"Our analysis of these factors suggests that the appreciation of the dollar probably made the biggest contribution to the change in the FOMC’s interest rate outlook. This conclusion appears to be consistent with the extensive discussion in the minutes of the impact of the dollar and trends in imports and exports on the FOMC participants’ outlook for the economy."
'Given the weak economic data in recent months, FOMC participants will likely need several rounds of solid data to convince themselves that the recent slowdown is in fact temporary. As such, we continue to expect the first rate hike to occur in September. "
Key Quotes
"The minutes from the March FOMC meeting provided some new information about how Federal Reserve officials expect the economy and monetary policy to evolve in coming quarters. That said, the minutes did not change our expectations for the trajectory of policy."
"The FOMC made major changes to its forecasts at the March meeting. The minutes largely confirmed what we had expected regarding the rationale for those changes. Adverse winter weather, the rapid decline in oil and gas drilling activity, and the fast appreciation of the dollar between the December and March FOMC meetings all provided a significant drag on aggregate demand."
"The decline in the Committee’s forecasts for the long-term unemployment rate implied that the FOMC sees somewhat more “slack” in labor markets. The minutes also suggest that the FOMC participants have become somewhat more pessimistic about the likely trajectory of productivity over the next few years."
"Our analysis of these factors suggests that the appreciation of the dollar probably made the biggest contribution to the change in the FOMC’s interest rate outlook. This conclusion appears to be consistent with the extensive discussion in the minutes of the impact of the dollar and trends in imports and exports on the FOMC participants’ outlook for the economy."
'Given the weak economic data in recent months, FOMC participants will likely need several rounds of solid data to convince themselves that the recent slowdown is in fact temporary. As such, we continue to expect the first rate hike to occur in September. "