2016.05.1802:49:00UTC+00Fed Officials Warn Over Markets’ Dovish Hike Expectations

Several FOMC members have come out and warned against too dovish expectations by market participants over rate hike. Yesterday it was Atlanta FED President Dennis Lockhart, Dallas FED President Robert Kaplan and San Francisco FED President John Williams. Last week it was Boston FED President Rosengren and Kansas City FED Esther George.

Kansas City FED President Esther George has already voted twice this year, in favor of rate hikes. She considers rates as too low. Expect her voting the same in June meeting.

Boston FED Rosengren has long been a vocal supporter of lower rates but he warned while speaking last week that financial market is too pessimistic about fundamental strength of U.S. economy, thus underestimating rate hikes.

Mr. Lockhart and Mr. Williams have warned in similar lines. According to Williams, data are making good case for rate hikes in next few meetings. Moreover he feels, economic outlook is good and making case for 2-3 rate hikes this year.

Mr. Lockhart, who doesn’t vote this year, seeing encouraging signs in recent inflation readings along with data showing a bounce back in growth from soft first quarter. He adds, if data remains encouraging, he would voice support for a move in June. He also said, according to many of his colleagues market participants may be too dovish in their expectations.

Dollar is relatively better bid since yesterday, up 0.21% so far today, trading at 94.77.