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Fed update-Jerome Powell’s testimony to Congress

Summary:
The Fed remains upbeat on growth and its members may be tempted to raise their rate expectations.Fed Chair Jerome Powell highlighted continuity with Janet Yellen’s monetary policy in his testimony before Congress today.He highlighted “positive developments” since the December meeting. This could be a hint that an additional rate hike could be in the pipeline (The Fed indicated three rate hikes in the December dot plot).Reading between the lines, it remains clear that the Powell Fed will not seek to undermine the large fiscal easing with sudden monetary tightening.We continue to expect four rate hikes this year and two hikes in 2019, above current market expectations. But these market expectations have been rising lately.Read full report here

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The Fed remains upbeat on growth and its members may be tempted to raise their rate expectations.

Fed update-Jerome Powell’s testimony to Congress

Fed Chair Jerome Powell highlighted continuity with Janet Yellen’s monetary policy in his testimony before Congress today.

He highlighted “positive developments” since the December meeting. This could be a hint that an additional rate hike could be in the pipeline (The Fed indicated three rate hikes in the December dot plot).

Reading between the lines, it remains clear that the Powell Fed will not seek to undermine the large fiscal easing with sudden monetary tightening.

We continue to expect four rate hikes this year and two hikes in 2019, above current market expectations. But these market expectations have been rising lately.

Thomas Costerg
Thomas covers the US and Canadian economies from New York. He was previously based in London, covering the UK and the euro area. Thomas started his career with Lehman Brothers in London in 2007 and also worked at a Paris-based private bank and asset manager. Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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