TD with an out-of-consensus forecast for a rate hike at today's Federal Open Market Committee (FOMC).
- We maintain our long-held view that the Fed will tighten rates by a final 25 bps in June to a range of 5.25%-5.50%.
- If the Fed decides to 'skip' the June meeting, we expect the decision to be accompanied by communication that leans hawkish, signaling a likely hike for July.
- While a surprise Fed hike might provide some immediate knee-jerk support for the USD, the fact that it is likely the Fed's last hike should reinforce that we're nearing the end of the tactical rally.
- A Fed hike this week would likely to send a signal that the cycle is over, especially as data has been mixed recently.
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Statement due at 2pm US Eastern time and Powell's news conference follows a half hour later.
Earlier:
- BNP Paribas Federal Open Market Committee (FOMC) preview - why there'll be a hike in July
- Data on Tuesday showed US inflation kept slowing, should reinforce FOMC on hold decision (RBC preview)
- Goldman Sachs: FOMC likely to keep rates unchanged; dollar depreciation expected later
- Week Ahead: US CPI, FOMC, Retail Sales; ECB; PBoC, China activity data
"Maybe I'll hike today before you tomorrow."