A quickie from BoA / ML on the path of fed rate hikes
(Bolding below is mine)
- Earlier this year we had expected that the Fed would shift away from risk management toward a more straight-forward data-dependent policy stance
- And that the US macro data would improve enough to support a rate hike this summer
- Following the soft April jobs report we have reassessed both parts of that view
- Despite some Fed officials making the case for a "live" June FOMC meeting, we have been struck since early this year by Fed Chair Yellen's strongly dovish tone
- Thus we now expect the Fed will hike one more time this year, in September
- This very gradual hiking pace continues in our view with two hikes for 2017, in March and September
Added to the research note is caution on market pricing for a June or July hike (I was going to write June and/or July .... but, errr, no)
- BoA/ML does not think the threshold for another 25bp hike is nearly as high as market pricing implies (i.e. they think the mkt is mispricing a June or July hike, its more likely than the mkt is pricing)
- To hike, the need to see signs that continued progress is being made on more jobs and higher inflation
-
For more from ML, Greg McKenna has info from a different research piece, here
and Adam posted over the weekend something different again
