Rate Hike Debate Intensifies?

Economic Research	19 May 2016
UNITED STATES
Economic Highlights
Rate Hike Debate Intensifies? The minutes to the April 26-27 meeting, while more hawkish than the post-meeting statement and Yellen’s remarks, merely provide a less lop-sided perspective on the near-term likelihood of the policy path (kindly refer to our April 28 note, “Best Guesses & Speculations”). Clearly, the tone of the minutes is consistent with the chorus of Fed-speak since the April meeting, which has been generally skewed toward tempering the risks of excessive financial market underpricing of rate hike expectations. Overall, the FOMC seems to be recalibrating expectations for a possible 25bps increase (if the sharp adjustments in market-based rate hike pricing endure and assuming the negative responses from riskier asset prices do not escalate further) in the near-term, and possibly also contributing to the ongoing debate surrounding the imprecise interpretation of “gradual increases”. Economist:  Thomas Lam  | +65 6533 0389
To access our recent reports please click on the links below: 09 May: Early Peek into 2q16? 05 May: One Step Forward, Two Steps Back… 28 Apr: Best Guesses & Speculations 18 Apr: Rolling the Dice on the USD/JPY… 12 Apr: Is the Economy Only Slightly Above Water in 1Q 2016? 22 Mar: Is Fed “Guidance” a Potential Source of Volatility? 08 Mar: As Expansions Age, Are They More Likely to Stumble?