Fed Likely to Hike in June or July, Needs to Prepare Mkt: BofAML
(Bloomberg) -- Global economic/financial conditions have stabilized, if not improved, and further progress is expected toward Fed’s dual mandate in coming mos., BofAML’s Michael Hanson, Mark Cabana, Ian Gordon write in note.
- While Fed should stay on hold this wk, policy makers could suggest small reduction in global risks and/or drags on inflation
- “Some signal” about dissipating global risks, easing disinflationary effects could modestly lift mkt’s assessment of rate hike likelihood
- Statement is likely to acknowledge weak data in early 2016, contrast it with expectations for continued progress toward full employment and 2% inflation target
- More substantive signal for future hikes would likely be needed to raise mkt probability, isn’t likely
- Limited impact expected on rates or FX mkts
- Fed will likely hike again this summer; June is possible if global mkt selloff ahead of Brexit vote is limited; otherwise, there’s “good case” for July
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Ian Gordon (Bank of America Corp)
Mark Cabana (Bank of America Corp)
Michael Hanson (Bank of America Corp)
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