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Press review

Sergey Golubev, 2015.07.15 12:18

Chair Yellen will present the Semiannual Monetary Policy Report before the House Financial Services Committee on Wednesday so this is the expectation of 10 major banks:

• Goldman: "We expect that her testimony will be in line with the June statement, minutes, and press conference."
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• Credit Suisse: "We expect Yellen to preserve Fed policy flexibility, and do not expect her to close the door on a rate hike as soon as September."
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• RBS: "We think it is unlikely that Chair Yellen deviates strongly from the conclusions presented in her comments on the economy last Friday, though the most notable point of interest could be on international developments, particularly in Greece."
• BNPP: "Today, we expect Fed Chair Yellen to repeat her Friday comments that she anticipates hiking rates by year-end but that data is key."
• BTMU: "A speech from Fed Chair Yellen in Cleveland last Friday has perhaps taken some of the importance away from today’s semi-annual testimony given it seems very unlikely that we will get any notable change in the message given in the Cleveland speech – that is that the FOMC remains of the view that the first rate increase will take place later this year. Crucially in Cleveland last week, Chair Yellen acknowledged more explicitly that while she believes slack remains in the job market “some tentative hints of a pick-up in the pace of wage gains may indicate that the objective of full employment is coming closer into view.” Measuring the slack in labour markets is notoriously difficult and hence if wages start to accelerate further that will provide more meaningful information on the degree of slack than any internal economic analysis."
• BofA Merrill: "Overall, we expect Yellen to sound cautiously optimistic about the US outlook, in line with her comments at the June press conference and the broad discussion by voters in the June minutes."
• Barclays: "We do not anticipate any change in the Fed’s rhetoric about the prospects of monetary policy and we expect Chair Yellen to continue highlighting the data- dependency of future decisions."
• SocGen: "Will Ms Yellen feel the need to reiterate warnings that the time for getting rates off the zero bound is now approaching? A bland warning that rates will have to go up eventually is probably neutral for FX markets."
• Credit Agricole: "Her testimony will reflect the committee’s view that the economy is approaching economic conditions “consistent with warranting a start to the normalization of the stance of monetary policy.” Fed officials are looking for more evidence that economic growth is sufficiently strong and labor market conditions continue to firm enough to return inflation to the Committee’s longer-run 2% objective over the medium term. Committee decisions on changes to the Fed funds target will be made on a meeting-by-meeting basis. We look for Chair Yellen to focus more on the gradual pace that the Fed is likely to take in the rate normalization process and to downplay the importance of the date of the initial move."
• Danske: "We expect her to repeat the message from last week that she expects lift-off this year. We believe the market is pricing too few rate hikes over the next 1-2 years."