Deutsche Bank analyst says we now have a market driven Federal Reserve

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Thursday 24 September 2015

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Dominic Konstam, global head of rates research at Deutsche Bank says we'll see a rate hike from the Federal Reserve only when the market is "begging for it."

(ps, this is another catch up post from me .... )

• In the run-up to the September Fed meeting, a number of strategists cited the relatively low odds of an interest rate hike as a sign that the central bank would stay on hold for fear of roiling the markets with a move.
• "At the end of the day, the market expectations will determine whether or not the Fed can actually do anything ... And the Fed cannot fly in the face of the market if the market is saying, 'please don't raise rates,' without the risk that things are very very damaging in terms of the reaction."
• The probability of a hike implied by federal funds futures will have to be a lot higher before the central bank is able to act
• Says probability rates stay on hold until 2017 is "up there"

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I've been continually posting on banks calling for a December hike ... nice to get an alternative view from one of them (and from ForexLive people in the comments)