Fed won't raise rates on Wed, expect move in June: JPMorgan AMC

Ian Hui, Global market strategist at JPMorgan Asset Management believes that the Federal Reserve will not hike rate in its Wednesday meet.Market, as well, is expecting the Fed to keep interest rate at 0.25 percent to 0.50 percent while laying groundwork for further hike this year. However, Hui expects less than four rate hikes in 2016 and the first of that will come in by June. Fed, in its December meet, had indicated upto four hike in 2016. Hui further says that the market will closely watch the Fed’s commentary over global growth. Below is the verbatim transcript of Ian Hui's interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.Latha: What is your sense? Will the market see a major relief rally if the Fed were to talk dovish? What exactly are the phrases you would watch out for?A: The big talk at the moment is what is going to happen with the Federal Open Market Committee (FOMC). I do think that if the Fed makes a comment that the market will take either dovish or if they see the US still going stormy into the future then you might see some rally. However, pretty much like how the market thinks. I do not think the Fed will make a move at this meeting. We do overall think that it is still like a tightening is what the Fed should be doing but we do not think that they will move this week. The main reason for that global Purchasing Managers’ Index (PMI) data for services in manufacturing is still showing weakness. I think the Fed would be little more comfortable if they bode strongly above 50 especially for what we have seen for the Institute for Supply Management (ISM) even that has been recovering most recently. We also see the Fed worried about most of the other central banks, so they are still on an easing path when the Fed on tightening. They are probably still worried about strings of US dollar. We would still most likely see the Fed stay on hold and a lot of attention will be on the details of what they say and how the market will take that.Reema: No rate hike today but when do you expect the second rate hike to come from the Fed and how many in 2016?A: The Fed hasn't been afraid to get away. We are still waiting to see if they will change their view of their four rate hikes. Would probably leaning to less therefore this year originally. Last year we were also leaning to the four rate hike over this year but the US is still in a recovery, not a strong one but it is still in a recovery, so we still think that it will be less than four. So we still lean towards how the market is looking for less than four.However, we didn't see that first rate hike happening. At the moment I lean towards the view that it will happen if there is no strong signal at this meeting today; probably lean towards the June meeting or in the second or third quarter.