BlackRock's CIO of global fixed income, Rick Reider, spoke to Reuters
- Fed wants to raise rates one to two more times
- Will do so if inflation gathers steam
- Says that the markets' current interpretation is a bit extreme
- Second half of the year often delivers stronger economic data
- That could open a window for further hikes in June, September, or December
Fed fund futures continue to favour a rate cut (~13%) more than a rate hike (~8%) through to 2020 and that pricing is what Reider is arguing to be "a bit extreme". There's no doubt that the Fed is still hoping to be able to hike rates down the road, but Powell & co. will have to rely heavily on external developments like the trade war and global growth conditions before pulling the lever.
Not forgetting that the Fed also needs supportive US economic data to be able to justify that as well, and that means they need to see solid signs from other releases than labour market data.