global daily insight 23 march
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Insights.abnamro.nl/en
Daily Insight
23 March 2016
Who is who on the FOMC dot plot?
FOMC rate decision: between the “hawks” and the “doves
The attitude of Fed policymakers towards the path of monetary policy is used to classify them
as “hawks” or “doves”. The “hawks” prefer tighter monetary policy since they usually fear the
risks of inflation, while the doves are more keen on continuing monetary accommodation to
support the economy, particularly employment. For instance, the Chair of the Fed is often
classified as dovish. She has persistently shown a cautious tone. Chair Yellen has favoured
keeping rates on hold until there are clear signs that the labour market slack is diminishing. An
acceleration of wage growth would likely be a sign of a stronger labour market.
FOMC assessment of appropriate monetary policy
% “dot plot”
Source: Federal Reserve, ABN AMRO Group Economics
2
1.5
●●●● Lacker, Mester, Lockhart, George (v) (v)
●●● Bullard, Kashkari, Kaplan1 (v)
●●●●●●●●● Yellen, Fischer, Rosengren, Dudley, Tarullo, Brainard, Powell, Williams, Harker(v) (v) (v) (v) (v) (v) (v)
● Evans0.5
0
2016
Group Economics Macro & Financial Markets Research
Maritza Cabezas
Senior Economist
Tel: +31 20 343 5618
Aline Schuiling
Senior Economist
Tel: +31 20 343 5606
Based on the most recent interventions of FOMC policy makers, we have
assigned specific members to each dot in the dot plot
We still see a dovish bias, suggesting that downside risks to the outlook will
continue to have more weight in policymaking
A majority of members in favour of more hikes are non-voting
We expect the Fed to delay rate hikes this year
Eurozone surveys pick up in March but remain lacklustre
2 Daily Insight – Who is who on the FOMC dot plot? - 23 March 2016
The dot plot shows how members feel about monetary policy
Based on the most recent interventions of FOMC policy makers, we have assigned them a
specific dot in the dot plot, which was released in the March FOMC meeting. The dot plot
shows where each participant predicts the fed funds rate will be at the end of this year and in
the following few years. It provides insights into how the committee members feel about
monetary policy.
Voting FOMC members have a more dovish bias
We can draw several conclusions from the dot plot: To begin with, from the 17 members, a
majority (10) is classified as doves. Moreover, only 10 of the total number of members are
voting members. Of these 10 voting members, 7 are dovish and are expecting 2 rate hikes
this year. Finally, 4 of the 7 most hawkish members are non-voting. This all suggests that the
FOMC’s composition is dovish, implying that downside risks to the outlook will continue to
have more weight in policymaking.
Eurozone surveys improve but stay subdued
A broad range of business climate indicators for the eurozone was published yesterday. They
all improved in March, following sharp drops in January and February. The eurozone
composite PMI increased from 53.0 in February to 53.7, Germany’s Ifo business climate rose
from 105.7 to 106.7 (its expectations component from 98.8 to 100.0) and, finally, German’s
ZEW economic sentiment rose from 1 to 4.3. Despite the recovery in March, all indicators
were still well below their levels of the final few months of 2015, suggesting that GDP growth
lost some momentum in 2016Q1. Moreover, the details of the PMI report show that the
outlook for eurozone exports still is fragile, with the new export orders component of the
manufacturing PMI edging lower in March, staging its third consecutive monthly decline.
3 Daily Insight – Further ECB easing - 22 March 2016
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Day Date Time Country Key Economic Indicators and Events Period Latest outcome Consensus ABN AMRO
Monday 21/03/2016 08:45:00 EC ECB's Coeure speaks in ParisMonday 21/03/2016 09:15:00 US Fed's Lacker speaks in ParisMonday 21/03/2016 10:30:00 EC ECB's Constancio speaks in LondonMonday 21/03/2016 15:00:00 US Existing home sales - % mom Feb -7 -2 -1.0Monday 21/03/2016 17:40:00 US Fed's Lockhart speaks on US economy Feb -2 -1.0
Tuesday 22/03/2016 10:00:00 DE Ifo - business climate - index Mar 106.7 105.9 106.1Tuesday 22/03/2016 10:30:00 GB CPI - % yoy Feb 0.3 0.3Tuesday 22/03/2016 11:00:00 DE ZEW index (expectation economic growth) Mar 4.3 5.2 10.0Tuesday 22/03/2016 14:00:00 US FHFA house price index - % mom Jan 0.4 0.5 0.5Tuesday 22/03/2016 14:00:00 HU Base rate -% Mar 22 1.20 1.35 1.35Tuesday 22/03/2016 18:30:00 US Fed's Evans speaks in Chicago
Wednesday 23/03/2016 EC ECB's Weidmann speaks in LiechtensteinWednesday 23/03/2016 US New homes sold - % mom Feb -9.2 2.1 3.0Wednesday 23/03/2016 00:00:00 US Fed's Harker speaks in New York
Thursday 24/03/2016 10:00:00 EC PMI manufacturing - index Mar P 51.2 51.4 51.2Thursday 24/03/2016 10:00:00 EC PMI services - index Mar P 53.3 53.5 53.2Thursday 24/03/2016 10:00:00 EC Composite PMI output Mar P 53.0 53.2 53.0Thursday 24/03/2016 10:30:00 GB Retail sales - % mom Feb 2 -1Thursday 24/03/2016 13:00:00 TR Repo rate - % Mar 24 7.5 7.5 7.5Thursday 24/03/2016 13:15:00 US Fed's Bullard speaks in New YorkThursday 24/03/2016 13:30:00 US New durable goods orders - % mom Feb P 4.7 -2.0Thursday 24/03/2016 14:45:00 US Markit - Flash PMI Mar P 51.3
Friday 25/03/2016 00:30:00 JP CPI - % yoy Feb 0.0 0.3Friday 25/03/2016 13:30:00 US GDP - % qoq annualised 4Q T 1.0 1.0 1.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected key variables and events)