The Fed raised its rates but left the dot-plot unchanged for 2018. However, the forecasts for 2019 and 2020 were raised. All in all, the dollar reacted negatively. Is the market misinterpreting the event?
Here is their view, courtesy of eFXnews:
SEB Research discusses its reaction to today’s FOMC March policy statement and to the Fed new economic projections.
“As expected, the Fed raised the target range for the federal funds rate to 1.50 to 1.75 per cent at the FOMC meeting that concluded today. The vote was unanimous. As we predicted, a few FOMC members revised their rate path projections to indicate four hikes in 2018 but this was not enough to change the Committee’s median forecast for the fed funds rate that still indicates three hikes in 2018.
We expect the median forecast to shift to four hikes when the Fed presents revised forecasts in June and today’s statement supports our forecast of three additional hikes in 2018 (June, September and December).
We revise our forecast for 2019 from one to two hikes (March and June) in line with the Fed’s updated forecasts,†SEB argues.
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