Five rate hikes in 2016! Yes, five.
That was San Francisco Fed head John Williams' call in January of this year.
Now that the Fed has turned dovish (again), with poor economic data continuing its past peak cliffdive, markets are discounting the probability of any rate hike in 2016 at all. Currently, the market's probability of a hike isn't above 50% until February 2017.
Going out on a limb here ... but five hikes look like a stretch (given that there are just five meetings left in 2016).
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Here's an illuminating excerpt from the interview with CNBC's Steve Liesman back in January, in which John Williams discussed his rate hike outlook.
LIESMAN: So let's talk about the path for Fed rate hikes this year. The median seems to suggest four this year. Is that also your forecast?
WILLIAMS: Well, I think that given the forecast they have for where the economy's going, what's happening with inflation – and inflation is the one thing that we're still struggling to get back to our 2% goal. That to me is the main focus. You know, I think something in that 3 to 5 rate hike range makes sense, at least at this time. But we're data dependent. We continue to be data dependent so the data's suggesting that gradual pace of rate hikes makes sense. But we'll have to re-evaluate that, reassess that, based on where we see inflation and other indicators that kind of are factors in inflation and how we see economic growth over the next year." (Emphasis added)
Williams continued saying that, by his estimation, U.S. GDP is headed toward 2% at the end of this year.
(**If you'd like to read more Fed nonsense, here's the full transcript of the interview with links to the video.)