FOMC seen keeping its status quo unchanged – Danske Bank

Senior Analyst at Danske Bank Mikael Milhoj expects the FOMC to stay put at today’s meeting, matching market bets.

Key Quotes

“We expect the Fed to maintain the fed funds target range at 0.50%-0.75% in line with market pricing and consensus”.

“Unfortunately the FOMC statements are very static and usually do not change significantly from meeting to meeting so we do not expect much news. The Fed is still waiting for information on ‘Trumponomics’”.

“We expect the Fed to hike twice this year (in June and December) with risk skewed towards a third hike. Due to the strong US economic data recently (not least the strong jobs report for December) we will look for signs of whether the next hike could come as soon as March or May”.

“We expect 3-4 hikes next year, as the Fed has indicated clearly that it wants to offset Trump’s more expansionary fiscal policy, although obviously much can still happen before 2018”.

“More FOMC members have commented on the Fed’s reinvestment strategy lately and ‘quantitative tightening’ could become a market theme soon if the Fed tightens monetary policy faster than currently expected”.