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Fed on track to begin rate hikes mid 2015 - RBS

FXStreet (Bali) - According to RBS FX Strategists, the Fed appears on pace to begin rate hikes in the middle of next year.

Key Quotes

"Monetary policy divergence has long been a core component of our USD- positive outlook, and many of the notable developments this week give us confidence that the USD is well supported by relative monetary policy expectations."

"The PBOC surprised with a deposit rate cut today, adding the PBOC to the list of large economy central banks that are either actively easing policy or hold an increasingly dovish stance. The BoE has turned more dovish of late, ECB President Draghi has stepped up dovish rhetoric, and the BoJ expanded their QQE program in late October."

"All the while, the Fed stands out as hawkish in this environment where most are turning dovish. In particular, the FOMC minutes this week showed that many FOMC participants felt that the potential impacts on US growth due to a slowdown in global growth momentum were limited. The committee also seemed to downplay the strength of the USD on the outlook for the economy."

"At least for the moment, the US Fed is attempting to remain as neutral as possible in the evolving global currency skirmishes. The Fed appears on pace to begin rate hikes in the middle of next year, in our view."

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