According to a survey of 42
economists by Financial Times, more than 2/3rd of them has aligned themselves
with a rate hike by FED again in March.
In previous articles under
the same series name we discussed there are considerable gaps in expectation of
hikes for FED next year. While FED's own dot plot is suggesting four 25 basis
points hike next year, economists are calling for three and market is pricing
two. Our call is for two but with reinvestment policy change (very late next
year).
According to the survey
more than 50% are expecting FED to strike for third time in June.
Market is now predicating
with more than 50% probability that rates will rise in March. Previously it was
April. However next hike is being priced deeper next year.
If FED do hike in March,
question is how the hike cycle can be called as gradual with still no sign of
inflation pickup.
Source: Net Dania
