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18 May 2015
Probability of a Sept Fed 'liftoff' decreases - Nomura
FXStreet (Bali) - Nomura US Economics Team is losing faith for Sept Fed 'liftoff', noting that the probability is now somewhat lower, following last week's disappointing data, despite the team still assigns an 80% probability of the tightening cycle occurring this year.
Key Quotes
"Given the April retail sales report and other factors such as the wider-than-expected trade deficit in March and the sharp increases in Treasury yields recently, the recovery in domestic demand appears more modest to date and less certain going forward than we expected. Somewhat weaker growth in aggregate demand may weigh on labor market performance going forward."
"Consequently, we believe the probability that the FOMC will raise its target for short-term interest rates for the first time in September is now somewhat lower, and the probability of “liftoff” after September has somewhat increased."
"However, we still believe that the probability that “liftoff” occurs this year is substantial—about 80%—and that the most likely timing of the first rate hike is still, in our judgment, September."
Key Quotes
"Given the April retail sales report and other factors such as the wider-than-expected trade deficit in March and the sharp increases in Treasury yields recently, the recovery in domestic demand appears more modest to date and less certain going forward than we expected. Somewhat weaker growth in aggregate demand may weigh on labor market performance going forward."
"Consequently, we believe the probability that the FOMC will raise its target for short-term interest rates for the first time in September is now somewhat lower, and the probability of “liftoff” after September has somewhat increased."
"However, we still believe that the probability that “liftoff” occurs this year is substantial—about 80%—and that the most likely timing of the first rate hike is still, in our judgment, September."