Morning Update – 16/03/2017 – by Arjun Lakhanpal

March 16, 2017 by

Morning all.. Wall St closed up a solid 0.85% after the Fed showed no sign of any hurry to raise rates and looks like they are sticking to the Dots. However there was little follow up from the Nikkei which closed more or less unchanged due to the fall in USDJPY overnight. The Fed hiked rates 25bp as expected; voted 9-1 with Kashkari dissenting (unanimous was expected); 9/17 members see 3 hikes in 2017, vs 6/17 in December; sees faster hikes in 2019; 2018 & longer run rate unch; business fixed investment appears to have firmed somewhat; inflation moving close to target; FOMC expects inflation will stabilize ~2% over med-term; will carefully monitor inflation developments relative to its symmetric inflation goal; expects economic conditions will evolve in way that warrants gradual increases in Fed funds (previously: “only gradual increases”); repeats near-term risks “roughly balanced”; repeats job gains remain solid; jobless rate little changed in recent months; repeats will reinvest principal payments from holdings until rate normalization is well under way. GDP: 2017 unchanged at 2.1%, 2018 at 2.1% (2.0% prior), 2019 unchanged at 1.9%, longer run unchanged at 1.8%; Unemployment: unchanged at 4.5% for 2017, 2018, 2019 and longer run lowered to 4.7% (4.8% prior); Core Inflation: 2017 at 1.9% (1.8% prior), 2018 & 2019 unchanged at 2.0%.. Thge BoJ meeting was a non-event. BoJ: kept monetary policy steady with short-term interest rate target at -0.1% and 10y JGB yield tgt around 0%; YCC decision 7-2 with Sato/Kiuchi dissenting; keeps economic assessment unch, continues to expect moderate recovery as a trend; leaves pledge unch to buy JGB at more or less annual pace of ~¥80trn and ETFs at ¥6trn; cuts view on housing investments; Kiuchi (again) proposed to scrap neg rates and readopt framework centring on QE and more pessimistic view on px outlook but voted down 8-1; Sato opposed monetary base expansion. This morning we get Swedish unemployment,Norway rates decision and EU CPI data.. Good luck….