RHB | US | Is Fed “Guidance” a Potential Source of Volatility?

Economic Research	22 March 2016
US
Economic Highlights
Is Fed “Guidance” a Potential Source of Volatility? The downward nudge in the fed funds target rate projection at the March 15-16 FOMC meeting has apparently raised the bar for additional rate hikes in 2016 and perhaps muddied the magnitude of future rate hikes. Indeed, the noticeable rise in the number of Fed participants (voters & non-voters) who favor one-to-two rate hikes in 2016 at last week’s meeting--10 out of 17 participants (presumably including core voting members of the FOMC) compared with 4 participants in December 2015 (kindly refer to chart 1)--is compelling us to change our Fed call on rate normalization. Economist:  Thomas Lam  | +65 6533 0389
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