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Rate hike coming in 2015, Fed’s Dudley and Williams - Deutsche Bank

FXStreet (Delhi) – Research Team at Deutsche Bank, note that the two Fed officials pointed towards 2015 lift-off in their speeches yesterday while Chicago Fed President Evans said that mid-2016 will be appropriate timing for the rate hike cycle to begin.

Key Quotes

“Although noting that his expectation on timing was ‘not calendar guidance’ and instead ‘depends on the data’, the NY Fed President said that ‘my expectation is that we probably will raise interest rates later this year’, citing confidence that the inflation target will be hit sometime next year.”

“This was followed by a much more dovish tone from Chicago Fed President Evans who said that while the Fed is getting closer to liftoff, still noted that he has mid-2016 in his projections. In particular Evans noted that in his view it will be around that time that ‘the headwinds from lower energy prices and the stronger dollar dissipate enough so that we begin to see some sustained upward movement in core inflation’.”

“Meanwhile and speaking after markets closed, San Francisco Fed President Williams reiterated his call for liftoff sometime this year, although noted risks to this from dollar appreciation and stuttering growth abroad.”

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