Fed: No change in rates coming – Danske Bank

Analysts at Danske Bank do not expect the Fed to hike the Fed funds rate tonight at 20:00 CET (in line with consensus and market pricing).

Key Quotes

“As it is one of the interim meetings without updated projections and a press conference, we do not expect Powell & co to make big changes to the policy signals in the statement.”

“We do not think the Fed will cut the interest rate on excess reserves by 5-10bp at this meeting despite the effective Fed funds rate trading exactly at the IOER.”

“We think the Fed will wait until December and then hike the target range by 25bp but only raise the IOER by 15-20bp. In our view, the Fed is on track to raise the Fed funds rate to 3%, which is the neutral rate, where monetary policy is neither expansionary nor contractionary. This will happen in June (hikes in December, March and June).”