THE FED IN 2019: MORE DATA-DRIVEN, NOT YET PAUSING

We expect the Fed to deliver at most four more hikes. The one at the December 19 meeting will likely be followed by two rises in the first half of next year; the last one will depend on the state of the US economy at the end of 2019.

Highlights:
  • We expect the Fed to deliver at most four more hikes. The one at the December 19 meeting will likely be followed by two rises in the first half of next year; the last one will depend on the state of the US economy at the end of 2019.
  • As the cycle matures and the impact of past rates feeds through the economy, the Fed has to switch from a predetermined course to a more careful assessment of the economic prospects. In this sense the comments by Powell and Clarida reflected more a statement of the current conditions than a change in strategy.
  • The switch to a more data-driven ratemaking occurs at a time when evidence of a moderation in growth starts to emerge and the risk of an inflation overshooting dims.
  • Market reacted strongly, and now are underpricing the Fed’s resolve to stick to its plans. We expect a reassement, in line with our outlook of higher US interest rates, as data show a resilient economy with inflation grinding higher.
Read the full publication below.
THE FED IN 2019: MORE DATA-DRIVEN, NOT YET PAUSING

RELATED INSIGHTS

GLOBAL VIEW – ENJOY SUMMER WHILE IT LASTS
As lockdowns have been lifted and global activity rebounded from the Q2 nadir, hopes of a strong recovery have helped risk assets advance further over July.
Generali Investments among preferred asset managers brands in Europe
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.
PODCAST:
LIFE AFTER COVID -
THE LDI VIEW
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.