FOMC: Gradual rate rise expected as data continues to support - Fidelity

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 17, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Stephanie Sutton, Investment Director for US equities at Fidelity International, notes that as expected, the US Federal reserve kept current interest rates intact using the excuse of volatility and a global slowdown to justify its decision.

    Key Quotes

    “Indeed a steady stream of sturdy economic data - particularly pertaining to the labour market - and a recovery in financial markets bolstered the arguments for a rate hike, but the uncertainty in the global economy, frailty in the domestic manufacturing sector and still strong US dollar supported the case for ‘no action’.

    Importantly, the Fed is pragmatic and has learnt to communicate well with market participants. In a surprising move, the Fed reduced the predicted number of rate increases for the remainder of this year, as officials avoided giving overly hawkish signals. The median prediction now sees two rate increases this year rather than four. Investors will be keeping a watchful eye on June’s meeting.

    Stocks reacted well to the announcement with the S&P 500 witnessing an uptick, and the US Dollar has weakened to the dovish tone. Going forward, we expect gradual rate rises later this year as the economic data continues to be supportive. The Fed will continue to monitor both domestic and external factors before making its next move.”
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