Fed: Only two hikes next year – Danske Bank

Research team at Danske Bank have changed their Fed call and now expect two hikes next year instead of three.

Key Quotes

“The timing of rate hikes next year has become more difficult as every meeting from now on is 'live', as there will be a press conference after every meeting. With a slightly more concerned Fed, March may be too early, making May (or even June?) more likely. Then the second hike would come during the autumn in September or October.”

“We stick to our view that the Fed will end its hiking cycle next year. Compared to market pricing, our Fed call is still hawkish. We did not get any news on when the Fed will stop shrinking its balance sheet and based on the press conference, it seems unlikely to happen before H2 19 unless something extraordinary happens.”