Fed: A single hike this year is the most likely scenario - BBH

According to analysts from Brown Brother Harriman, today the Fed met expectation fully with keeping rates unchanged and with the words it used in the statement. They see a single rate hike during 2016.

Key Quotes:

“The Federal Reserve met market expectations fully. It upgraded its assessment of the economy, recognized that the near-term risks had diminished, and remained committed to normalizing monetary policy.  There was one dissent from the steady stance, and KC Fed President George had already tipped her hand.”

“There was little direct guidance about the September meeting or whether most Fed officials still saw two hikes this year, as they seemed to last month. This is not particularly surprising, and reading between the lines, a single hike this year is the most likely scenario.”

“After today, there are three meetings left for this year in September, November, and December. The November meeting is too close to the elections for the Fed to move. This judgment is made by examining the modern history of the conduct of Fed policy. However, the Fed has moved in September of presidential election year, and as we know from last year too, year-end considerations do not prevent a move in December.”

“The September meeting is late in the month. Fed officials will see two more employment reports and more cyclical data before they meet again.  Yellen will speak this year at the KC Fed’s gathering in Jackson Hole at the end of August. Intended or not, that speech will help shape market expectations for the September and possibly, the December meetings.”