Economists are starting to shift their expectation of the FED to begin hiking rates later than soon. I have said this in my Pro Traders Club all along; that the FED was simply buying time with verbiage to pasify the markets(how unusual for the FED:*&?É). We also
note that this week's FOMC decision precedes the BoJ decision and as
press reports have suggested the BoJ could be looking at more
expansionary measures in the near-term, it will be interesting to see
if more policy normalization by the Fed is followed by further BoJ
policy expansion by the BoJ.
UBS economists still expect the Fed to start hiking the federal
funds rate this year but they are modifying the timing and magnitude of
these increases based on our reassessment of evolving leadership and
Congressional relationship developments at the Federal Reserve Board.
We now see the projected start date for fed funds rate increasesat the
end of September as opposed to the end of June, previously. Also, we
now foresee a slower initial pace of tightening, with our year-end fed
funds rate forecasts lowered by 50 basis points to 0.5% for 2010 and by
100 basis points to 2.0% in 2011
Source: Credit Suisse, Bloomberg, UBS, Chris Lori
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Details : www.chrislori.com
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