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19 Jun 2013
Flash: Key questions lie ahead at FOMC meeting – Deutsche Bank
FXstreet.com (New York) - According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Ahead of the meeting later today, if the Fed does hint towards imminent tapering then they will stress that fed funds rate hikes are still a long way off and well into 2015 under the FOMC's projections.”
Regarding the Fed's Summary of Economic Projections (SEP) which are scheduled to be released with today's policy statement, Deutsche Bank's Joe Lavorgna thinks that the Fed's forecast ranges for real GDP growth (2.3%-2.8%) and unemployment (7.3%-7.5%) remain tenable, and thus are not likely to change meaningfully. Changes may occur in inflation forecasts given recent softening inflation indicators.
In the last SEP, the year-end core inflation range was 1.5%-1.6% - currently, the core PCE deflator is running at 1.1%. As a result, our US economists would not be surprised to see the lower end of policymakers' 2013 core inflation range be reduced by 20-30 basis points. “We suspect Bernanke's thoughts regarding the recent market volatility will also be closely watched and keenly interpreted. Finally, there will probably be some questioning around the Chairman's plans when his tenure ends in January 2014.” they add.
Regarding the Fed's Summary of Economic Projections (SEP) which are scheduled to be released with today's policy statement, Deutsche Bank's Joe Lavorgna thinks that the Fed's forecast ranges for real GDP growth (2.3%-2.8%) and unemployment (7.3%-7.5%) remain tenable, and thus are not likely to change meaningfully. Changes may occur in inflation forecasts given recent softening inflation indicators.
In the last SEP, the year-end core inflation range was 1.5%-1.6% - currently, the core PCE deflator is running at 1.1%. As a result, our US economists would not be surprised to see the lower end of policymakers' 2013 core inflation range be reduced by 20-30 basis points. “We suspect Bernanke's thoughts regarding the recent market volatility will also be closely watched and keenly interpreted. Finally, there will probably be some questioning around the Chairman's plans when his tenure ends in January 2014.” they add.