Investing.com – While markets continue to put the possibility of a rate hike by the Federal Reserve (Fed) in March at less than 20%, according to Investing.com’s Fed Rate Monitor Tool, Morgan Stanley suggested that there would be three main events can could likely change expectations in the run up to next month’s meeting.
These experts stated that they don’t expect the Fed to tighten policy in March (in fact, their bets for a first hike are for September) and explained that “core members of the Fed, unlike ahead of the previous two rate hikes, have not yet sent a signal that a rate hike at the ‘next meeting’ is under serious consideration.”
They noted that investors now expect some such signal; although they believe that those expectations will decrease the further the Fed gets into the tightening cycle.
Given that Yellen made no such indication in her semi-annual testimony to Congress last week, these analysts suggested that there will be “three opportunities” for the Fed to provide a clearer indication for a rate hike at the March 14-15 policy meeting:
1. The Fed will release the minutes from its January meeting on Wednesday, February 22.
2. Fed vice chairman Stanley Fischer is scheduled to speak in New York at the Chicago Booth School’s U.S. Monetary Policy Forum on March 3.
3. Fed chair Janet Yellen will also speak on March 3 at The Executives’ Club of Chicago.
“Given the signal for the December 2016 rate hike was included in the minutes of the November 2016 meeting, we will look closely for similar language when the minutes of the last meeting are released on February 22,” these experts said.