Gold Silver Reports- US: Fed’s Powell suggests bias for rate hikes – ING — James Knightley, Chief International Economist at ING, hold the view that the Fed Chair Jerome Powell’s prepared text of the Congressional testimony hinted towards upside risks for interest rates and thus, anticipates four rate hikes this year.
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Key quotes:
“As such, the tone of Powell’s written testimony suggests that the Fed position hasn’t really changed under its new leadership with gradual hikes remaining the theme. However, his hints at the upside potential for inflation and the increasing positives for growth suggest the risks are skewed towards a more aggressive monetary policy response. At the moment the Fed is projecting three rate hikes this year while financial markets are currently pricing in around 80bp of rate hikes. Given our above-consensus 3% GDP growth forecast for 2018 and the potential for inflation to rise more quickly than many in the market anticipate (wages, dollar weakness, medical care costs, cell phone data distortions, commodity prices), we are now forecasting four rate rises this year. We look for one every quarter – starting with the March 21 FOMC meeting.” – Goldman Neal Bhai Reports
