We view the speeches and interviews last week as consistent with the March dots: two or more hikes this year, realistically two or three, centered on two. There was a continuing emphasis that rate hikes would be cautious and gradual. Rosengren said that futures prices implied a path of rate hikes that was too few and two late. This view is surely shared by all the other participants and points to a material market correction if the market begins to converge to the path that the FOMC now anticipates. Williams revealed that he saw two or more hikes as appropriate and Evans two; of course, in both cases, these projections were conditional on the data coming in consistent with their expectations. Growth estimates remain in the range we see as good enough for a hike in June: 2% (Dudley and George) to 2%-2½% (Evans and Mester). Williams saw “pretty strong upside” potential for both growth and inflation this year and global risks as “pretty balanced.” But Dudley, more dovish, saw the risks related to global uncertainty as tilting the balance of risks to the downside.
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