Diluting, Not Extinguishing, Rate Hike Expectations

Economic Research	8 July 2016
US
Economic Highlights
Diluting, Not Extinguishing, Rate Hike Expectations The overall tone of the June FOMC minutes released yesterday, mostly because of domestic developments and uncertainties, was not gloomy but undeniably cautious.  The post-Brexit outcome recently, despite the different views from policymakers on the likely imprint on the US economy, adds another layer of caution to the rate hike equation.  Hence, the FOMC meeting at the end of this month, with the policy stance virtually certain to remain unchanged, is unlikely to contain any material surprises.  But the latest comments from Fed officials (by voters and non-voters) did not appear to justify throwing-in the towel on the prospect of increasing rates this year.  Also, the primary dealer survey results (pre-Brexit) suggest that the chances of resuming a rate hike this year, while incrementally lower, are still more likely than a steady or looser policy stance. Economist:  Thomas Lam  | +65 6533 0389
To access our recent reports please click on the links below: 05 July: Special Report: Elevating the Debate on Fiscal Policy… 27 June: Post-Brexit: Guesses & Speculations… 21 June: Gauging the Pulse of the Economy… 16 June: There’s still a Chance… 06 June: Is the Sky Falling? 02 June: The Swing in Broad Market Conditions... 26 May: Tentative but Broadly In line…