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    Yellen to strike a balanced tone at the upcoming FOMC press conference – RBC CM Sandeep Kanihama

    Research Team at RBC Capital Markets, expects that the Yellen will strike a balanced tone at the upcoming June FOMC press conference—similar to her recent June 6th speech.Key Quotes “We think that this tone will not only find its way into her Q&A but, indeed, into the statement where on net we do not look for any material changes. As it relates to the Summary of Economic Projections (SEP), we do not think they make any adjustments to the 2016 dots for fear of pricing out the vestiges of hikes priced in by the market (members have done a lot of heavy lifting of late in order to get those odds up).We do expect to see some downward shift in 2017 dots which would impact the average, but we do not envision enough of a shift to impact the median. Other key adjustments could come in their inflation forecasts. We expect they will give a nod to the rise in energy prices by lifting their headline PCE from their current median of 1.2%.Also, watch for another cut in their long term unemployment rate estimate. Yellen quite explicitly stated in a relatively recent speech that full employment may be lower than their current estimate of 4.8%. In combination with her expressing in her last speech that slack still remains in the labor backdrop, their LT estimate of the u-rate is ripe for a reduction.”


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