A piece up on Bloomberg from Tim Duy, professor at the University of Oregon
Watch out for this, he says:
- The Fed's statement will likely be interpreted as dovish
- Be wary that Yellen is subsequently interpreted as hawkish as she will reaffirm the case for a rate hike later this year
(For us, that means the potential for whipsaw moves)
More on Yellen's news conference:
- She will repeat her conviction that policy needs to be forward looking and thus the time to begin normalizing draws near
- But she will also reiterate that the path of policy is data dependent
- & the current data and forecasts point to a very gradual increase in rates
Duy goes on with the 'bottom line':
- The Fed will not make a rate change at this meeting
- Will leave market participants debating over September or December as the timing of the first hike
- Will leave September open
- The Fed expects a long, gradual pace of policy normalization ... . From their perspective, the data have yet to justify anything else
