The FED hiked interest rates as expected and also lifted expectations for 2017 from two to three rate hikes. Here is the quick response from CIBC:
Here is their view, courtesy of eFXnews:
Forgive someone for yawning about the Fed’s unanimous decision to raise rates a quarter point today, which was well telegraphed in advance. Nor were there material changes in the growth and inflation forecast, as the FOMC doesn’t seem to have caught a case of Trump fever just yet.
That said, there is some optimism built into the outlook, as the “dot” forecast now projects one more rate hike in 2017 than was previously the case in order to keep growth at essentially the same pace as previously projected.
The statement’s wording was no more hawkish than needed to justify hiking rather than continuing to wait, retaining the pledge to be gradual ahead. But the higher dot forecast will have markets adding a bit to expectations for rate hikes ahead. We still see 5 quarter point hikes over the next two years, but now see three in 2017 and two in 2018 vs. our earlier call of two and three, seeing the Fed being a bit more preemptive in anticipation of some fiscal stimulus.
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