FED Rate and Balance Sheet Forecast

Our forecast has been for the FED to raise rates in June.  Although the economic data has been weaker as of late, we are sticking by our forecast.

This is in-line with our overall view for 2017 that the FED would have multiple rate rises as discussed in prior posts.

Market expectations are a bigger factor than economic data at this point.  Credibility is very important to central banks, especially the FED, thus even though some forecasts predict a non-hike in June, market expectations are more important.

Economic data fluctuates and it would be right for policy moves to be delayed.  What in our view will be delayed is statements on quantitative tightening (QT) or the balance sheet issue.

Forecast

0.25 rate rise in June meeting

QT statement delayed till later – September