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Edition du 16 mars 2017 - Crédit Agricole S.A.
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  • Edition du 16 mars 2017

    US-Rate hike but little change in views

    As widely expected, the FOMC raised the Fed funds (FF) target by 25 bps to a range of 0.75% to 1.00%. The Fed's median projection for the FF rate at the end of 2017 was 1.4%, implying two additional 25 bps rate hikes this year. This is unchanged from the December projection as was the projection for yearend 2018 at 2.1%, implying 3 additional hikes next year. The longer-run fed funds rate projection remained at 3.0%.

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  • Content:

    - The FOMC Statement
    - FOMC's rate outlook was essentially unchanged
    - No change on balance sheet outlook.
    - Our view
    - Economic projections
    - Changes to the policy statement

  • Extract:

    The committee's updated economic projections were essentially the same. 2018 GDP growth was nudged up 0.1 point to 2.1%. Unemployment was projected unchanged at 4.5% through 2019 and the median core PCE deflator projection for 2017 rose 0.1 point to 1.9%.
    We believe there are reasons for the FOMC to proceed cautiously with rate normalization. (1) Softer growth in Q1, which may prove to be transitory, argues nonetheless against an aggressive approach to removing accommodation with inflation below the Fed's objective. (2) Uncertainty over the outlook for stimulative fiscal policy as well as developments on the international trade front may well lead financial market conditions to tighten, reducing the near-term pressure on the Fed to hike.

  • Associative topics : Economics | North America


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