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- Here’s what Wall Street thinks about the Fed’s rate hike
Here's what Wall Street thinks about the Fed's rate hike
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Loading...The Federal Reserve hiked interest rates on Wednesday, raising its target federal funds rate by 25 basis points to a range of 0.75% to 1.0%.
The rate hike is seen as a vote of confidence in the US economy, which has witnessed increasing inflation and job growth.
Societe Generale, Albert Edwards
"So finally the Fed has got its 'a' into 'g' and raised rates. Although this will be the first of many rate rises in a move to normalise rates, the Fed's lack of verbal assertiveness means the market still cannot bring itself to believe the Fed's own projections for interest rate hikes."
Goldman Sachs, Richard Ramsden
"The Federal Reserve hiked the fed funds rate by 25 bps on March 15, while language around risks was modestly upgraded. Notably, the Summary of Economic Projections (SEP) still suggests a total of three (i.e., two additional) hikes this year — which implies modest upside to our '17/'18 EPS estimates. While the statement was largely as expected, stocks sold off on what appears to be positioning-related factors. We think that, from here, investors are trying to frame (1) potential upside from faster/more than expected hikes against eventually inflecting deposit betas and (2) to what extent rates will help to offset some of the recent weakness in loan growth. In our coverage, we see most absolute earnings upside from higher short rates in CMA, SCHW, ZION, and BAC."
JPMorgan, Michael Feroli
"As widely expected, today the Fed raised the target fed funds range by 25 basis points to 0.75-1.0%. The FOMC's interest rate forecast 'dots' pointed to unchanged guidance on their expectations of three hikes this year followed by another three hikes next year. They continue to see the neutral rate at around 3.0%. The dot plot came in at the dovish end of the range of outcomes, particularly since the tone of Fed-speak has become more optimistic since early December."
Mizuho Securities, Steven Ricchiuto
"The Fed hiked rates 25 basis points as the market expected. I still think this will be seen as a mistake in the period ahead. The Fed rushed this move and did so with no change in their macro forecast or assessment of the current environment. Although they left the 'Dots' unchanged, the tone of the Committee's forecast turned a bit more bearish. This helps explain why the long end did better on the announcement. Without any real upside momentum in the core or a broadening out in the inflation base they hiked rates."
Morgan Stanley, Ellen Zentner
"After today's action, the FOMC still described the stance of policy as accommodative, which means it still feels (at this point) it can do more. Moreover, financial conditions eased on the back of today's action, which if sustained, would suggest to policymakers more adjustments are needed. Incoming data have unfolded in line with the Fed's current outlook, so there was nearly no change in the Fed's SEP and only a 'very modest' adjustment to the expected path for rates. The balance of risks to the outlook were still seen as 'roughly balanced,' and continued gradual increases in the federal funds rate, all else equal, are expected."
The Vanguard Group, Roger Aliaga-Diaz
"The Fed's decision to raise interest rates today is in line with Vanguard's perspective of the state of the US economy. We're pleased that the Fed is moving towards normalization, as the balance of risk has clearly shifted. Further, for the second time in a row, we're seeing the market aligning to the Fed's expected path, rather than vice versa.
"We believe that additional rate hikes are warranted in 2017, given the strength of the labor market and upward inflation trends. We agree with the Fed's signaling to allow inflation to run hot in order to achieve a sustained 2% target — yet anticipate another hike in June."
Business Insider
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