USD: Dec FOMC: Sticking To Our Call For 3 Hikes In 2018 With First Hike Likely In June - SEB

SEB Research discusses the reaction to today's FOMC decision.

"As expected, the Fed raised the target range for the federal funds rate by 25 bps to 1.25-1.50 per cent at the FOMC meeting that concluded today. Voting against the action were Neel Kashkari and Charles Evans, who preferred to maintain the existing target range for the federal funds rate. Market reactions were small. The Committee’s median forecast for the fed funds rate was unchanged compared to the September meeting and still indicates three hikes in 2018 and two hikes in 2019. The ‘dot plots’ show that 10 FOMC-members expect three or more hikes in 2018 compared to 11 members in September...

We stick to our forecast that the Fed will hike three times in 2018. We expect worries over inflation will cause the Fed to put its first hike in 2018 on hold until June, followed by hikes in September and December. However, if inflation firms more markedly in the near-term, a first raise in March is a distinct possibility. In 2019 we predict one hike," SEB argues.

Source: SEB Research