SEB Research discusses the reaction to today's May FOMC policy statement.
"As widely expected, the Fed maintained the target range for the federal funds rate at 1.50 to 1.75 per cent at the FOMC meeting that concluded today.
The vote was unanimous. There were no revised forecasts nor press conference. However, there were several adjustments to the wording on inflation supporting the view that the Fed has become more confident that inflation will reach target and that there could be a slight overshoot of the 2 per cent inflation target over the medium term.
We stick to our forecast that the Fed will hike the fed funds rate three more times in 2018 (June, September and December) and twice in 2019 (March and June).
Growing inflation pressure will drive the Fed’s median forecast for the rate path to indicate a total of four hikes in 2018 when new projections are presented in June," SEB argues.