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23 Mar 2016
USD: Hawkish Fed comments have limited impact on sceptical market - MUFG
Lee Hardman, Currency Analyst at MUFG, notes that the US dollar failed to derive much support from the recent more hawkish Fed comments highlighting that the market is more even more sceptical now that the Fed will follow through with planned rate hikes.
Key Quotes
“Atlanta Fed President Lockhart stated that further rate hikes are justified this year and are possible relatively soon which could be justified as early as in April. He is encouraged by recent data that suggest inflation will firm in the second half of the year and that the US economy is getting closer to full employment. Nevertheless he backed the Fed’s patient approach at the last policy meeting saying that the Fed is setting policy in an environment of ambiguity. He cited concern as well over inflation expectations which the Fed needs to remain attentive too while evidence on higher wage growth is not yet convincing.
San Francisco Fed President Williams also provided a more hawkish policy signal stating that assuming everything else is basically the same and the data flow continues the way I hope and expect, then April or June would definitely be potential times to have an increase in interest rates”. He noted that the Fed would be raising rates sooner and more quickly if it were not for international factors.”
Key Quotes
“Atlanta Fed President Lockhart stated that further rate hikes are justified this year and are possible relatively soon which could be justified as early as in April. He is encouraged by recent data that suggest inflation will firm in the second half of the year and that the US economy is getting closer to full employment. Nevertheless he backed the Fed’s patient approach at the last policy meeting saying that the Fed is setting policy in an environment of ambiguity. He cited concern as well over inflation expectations which the Fed needs to remain attentive too while evidence on higher wage growth is not yet convincing.
San Francisco Fed President Williams also provided a more hawkish policy signal stating that assuming everything else is basically the same and the data flow continues the way I hope and expect, then April or June would definitely be potential times to have an increase in interest rates”. He noted that the Fed would be raising rates sooner and more quickly if it were not for international factors.”