Hawkish Shift Opens The Door To Fed Rate Hikes

The Federal Reserve's recent meeting marked a clear hawkish shift, signaling higher policy rate projections despite ING maintaining a call for an extended pause. The market responded with a flatter yield curve and a stronger US Dollar.

Key Takeaways

• 1.The Federal Reserve has made a clear hawkish shift in its policy tone and updated projections, with the dot plot signaling potential rate hikes.
• 2.ING expects the Federal Reserve to maintain an extended pause in interest rate hikes, supported by falling energy prices.

Table of Contents

• Hawkish shift opens the door to Fed rate hikes
• Markets acknowledge the prospect of higher policy rates
• Fed projections versus the previous expectations from March
• An extended pause from the Fed remains our call
• The Treasury curve shifts higher and flatter, but the curve structure remains benign
• Dollar enjoys commitment to price stability

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