HALISTER1: FOMC to Hike Once This Yr in Dec., Offset Hawkish Statement: UBS

FOMC to Hike Once This Yr in Dec., Offset Hawkish Statement: UBS

(Bloomberg) -- FOMC to keep rates steady on Sept. 21 and reduce number of 2016 hikes in dots to just 1, mitigating impact of hawkish statement and confirming policy makers intend to move in December, UBS economists Drew Matus, Samuel Coffin and Dave Liang write.
  • Fed’s projected path of rates in 2017 and 2018 would move lower, to 1.375% and 2.125% respectively
    • UBS continues to expect 2 more hikes in 2017
  • “Most aggressive move” would be if Fed surprised mkts and hiked by 25bps on Sept. 21, while keeping central tendency forecast of 2 hikes in 2016
    • This outcome seems unlikely, given recent softening of payrolls, ISM surveys, retail sales
  • Dovish option would be to keep rates steady and eliminate any moves in 2016; scenario seems “quite unlikely” given hawkish tone of some Fed speakers
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Drew Matus (UBS Asset Management Japan Ltd)
Samuel Coffin (UBS Global Asset Management Japan Ltd)
David Liang (UBS Securities LLC)

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