“Following A String Of Disappointing Data” BofA Capitulates On “Two Rate Hikes” Call
by Tyler Durden
ZeroHedge.com
05/06/2016
Moments ago it was Goldman, and now here is Bank of America, which until today had expected at least two hikes in 2016 but following “a string of disappointing data”, it too has thrown in the towel.
From the otherwise very cheerful Ethan Harris, so cheerful in fact that he forecasts no recession over the next decade.
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Fed call: it is a story for September
Following a string of disappointing data, the April jobs report has pushed us to change our Fed call. We are now looking for the Fed to hike once this year – in September – versus our prior forecast of a hike in June and December. Why the change?
There has been a loss of momentum in the US data, even controlling for distortions to 1Q GDP.
We believe the Fed is engaging in “opportunistic reflation”, targeting inflation above 2%.
Although financial conditions have improved, there are still concerns about an uncertainty shock related to the markets, UK referendum and US elections.
We still believe the Fed is engaged in a normalization process and look for the Fed to hike again in March next year after moving rates higher in September. But the Fed has emphasized the asymmetry of policy, which means this hiking cycle will be even slower than we had initially believed.
The Rest…HERE
