Fed will focus on improving labour market

GDP growth over the first half of this year could average less than 1% annualised. At the same time, however, labour market conditions have strengthened and price inflation appears to be picking up. Under those circumstances, we don't expect Fed officials to get too hung up on the weakness in activity. The bigger risk is still that the Fed begins to hike interest rates before mid-2015, which would be earlier than the markets currently expect.