Fed closing in on lift-off, as economy enjoys Q2 rebound

This week's FOMC meeting will be uneventful. With the Fed keen to stress that every meeting is "live" and that decisions are based entirely on the incoming data, we wouldn't expect any heavy hints in Wednesday's statement that a September rate hike is coming, even though that is by far the most likely lift-off date now. At most, it is possible that a reference to the "firming" of core inflation will be slipped in. We have tweaked our own rate forecasts, and now expect the Fed to raise rates at the September and December FOMC meetings, taking the fed funds target range to between 0.50% and 0.75% at year-end. We expect rates to rise to nearly 2.50% by end-2016.