EFTA01459046

... though slowing inflation and a tightening of financial conditions as the market re-prices the Fed may pause hikes in H2-2016 2016 Q1 Q2 Q3 Q4 • Inflation to firm-up • Inflation to stabilise, • Growth should remain broadly stable • Limited adverse potentially recede • Continued gains in labour market, with Expec- impact from first hike ■ Growth and labour unemployment falling further than Fed expects on growth market to remain on tations • Inflation likely to drop modestly in H2 • Labour market track • Tightening of financial conditions likely as continues to tighten market starts to re-price Fed path ■ Gradual pace to assess impact of hikes on • Consider tapering the reinvestment of its markets, economy securities holdings* Implica- ■ Remain data dependent • Expect one hike in the second half, with scope tions for for skipping a quarter before resuming hikes • Rate hikes likely in March, June the Fed Note: Currently, the Fed reinvests its maturing holdings of MBS and Treasuries purchased during OE. Deutsche Bank 40 ,;se , r4ye t,sig ic?ii htett.rg iho ngetir nareh db cc n 9 Research CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0119256 CONFIDENTIAL SDNY_GM_00265440 EFTA01459046