Investing.com – Despite the fact that the Federal Reserve (Fed) increased it call for the number of rate hikes in 2017 to three from its prior forecast of just two, experts at Deutsche Bank insisted that the U.S. central bank was “leaning moderately more dovish” coming into the new year.
Each year the U.S. central bank rotates its roster of Fed regional bank presidents that have the right to a vote on monetary policy decisions, with only the chair, vice chair, board of governors and the New York branch having a permanent position on the so-called Federal Open Market Committee (FOMC).
As part of the regular rotation for 2017, Chicago Fed president Charles Evans, Philadelphia’s Patrick Harker, Dallas’ Robert Kaplan and Minneapolis’ Neel Kashkari are replacing St. Louis’ James Bullard, Kansas City’s Esther George, Cleveland’s Loretta Mester and Boston’s Eric Rosengren.
Of note, George, Mester and Rosengren were the only dissenters on various policy decisions in 2016, calling for a rate hike when the consensus at the heart of the Fed opted to hold.
Deutsche Bank, that rates Fed members from 1 to 5, corresponding to most dovish to most hawkish, sees these changes as suggesting that “this year’s FOMC is moderately more dovish than last year’s.”
“This is one reason why we believe monetary policymakers will err on the side of tightening less rather than more this year, despite our well-above consensus projection for real GDP growth,” these experts said.
On the list of tabulations, four of 2017’s voting members receive the rating of 1, compared to just two in the prior year.
According to these analysts, with 3 as the neutral rating, only Philadelphia Fed chief Patrick Harker was placed in the hawkish camp with a rating of 4.
“The upshot of our 2017 ranking is that there are no notably strong hawkish voters on the FOMC this year,” they said.
“In turn, our average ranking declines to a low 2.1, from 2.4 in 2016,” the report concluded.