While the MPC’s improved confidence that Q1 GDP weakness was temporary helps explain the timing of the hike, they can hardly be accused of being upbeat on the UK growth outlook.

Robert Sierra, Director in Fitch’s Economics team says after a big day for policy normalisation the end of global QE is nigh.

ECB Governing Council Meeting, Riga 2018

This is the biggest change in Fed messaging for quite a long time.

FOMC Chairman Powell answers a reporter’s question at the June 13, 2018 press conference.

In addition to moving to four rate hikes this year and raising the 2019 interest rate forecast in the projections, we have the removal of the forward guidance on keeping rates “below long run levels for some time” and the remaining language on “gradualism” in normalisation has been weakened.

The Fed sounds more bullish on the economy and has noted the decline in the unemployment rate. As we discussed in our June 2018 Global Economic Outlook, the growing imbalance in the labour market means that it is only a matter of time before sharper upward pressures on wages start to be seen. We see unemployment falling to 3.4 per cent in 2019 which would be the lowest since 1953.

Robert Sierra, Director, Fitch Ratings’ economics team, shares his perspective.

ECB press conference April 2018

“After significant changes to its language in the March statement, today’s meeting was always likely to be a more lacklustre affair. But while Draghi confirmed that the underlying pace of expansion remains broad and solid, the recent moderation in growth indicators likely made the ECB even more determined not to rock the boat this month. Given that only two more meetings remain before September, the window is getting narrower for the ECB to communicate its expected change to forward guidance and policy. Along with the recent flat core inflation numbers and Draghi’s emphasis in the press conference on the impact of the stronger Euro on inflation, the ECB’s tone has become slightly more dovish. “

My response to the March 2018 Federal Open Market Committee decisions

Brian Coulton, Chief Economist, Fitch Ratings

“While there is no change to the Fed’s end 2018 interest rate projection, this is clearly a firming up of the future trajectory of policy tightening. The projected end-2020 Fed Funds rate is now a full 50 bps higher than in last September’s projections, at 3.4%. The Fed seems to be gaining confidence in the normalisation process as they see the labour market tightening quite a bit further than they previously predicted. The fact that the Fed have acknowledged some slight softening in recent demand side indicators while upgrading their 2017 growth forecasts underlines the impact of the easing in fiscal policy on the near-term GDP outlook”.

Brian Coulton

Chief Economist at Fitch Ratings

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