Doubling down on four rate hikes
Jerome Powell, chair of the US Federal Reserve (Fed), is confident about the central bank’s current path and could withdraw support at a faster pace, according to Jeremy Lawson, chief economist with Aberdeen Standard Investments. This slightly more hawkish take on the US economy at Powell’s debut testimony to Congress as Fed Chair is down to the trend seen in US economic data, its fiscal policy outlook and global economic developments.
Ahead of the testimony, the market was pricing in three to four rate rises in 2018 with the first quarter point increase at the 20-21 March meeting. The probablility of a fourth hike in December is running at 26%. Come 2019, few more increases are expected by the market, but ASI are forecasting another three to four.
Balanced dollar outlook
The dollar climbed on Powell’s testimony, but the currency is still just above levels last seen in December 2014.