Fed will likely make a shift to data dependency at the March meeting: Societe Generale

Quotes from Societe Generale:

- Chair Yellen offered few clues today as to the timing of the lift-off in rates. But her speech suggests that the FOMC is very close to removing the "patient" language from its policy statement. 

- We know from the Jan FOMC minutes that the Committee discussed some possible communications for underscoring data dependency after the removal of "patience." Yellen's speech today was clearly part of that strategy. She emphasized that a "modification of the forward guidance should not be read as indicating that the Committee will necessarily increase the target range in a couple of meetings. Instead [it] should be understood as reflecting the Committee's judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting." In other words, it is an option but not a commitment to hike. 

- We continue to assume that the Fed will make this shift to data dependency at the March meeting and that continued improvement on labor market and wage trends will prompt them to hike rates in June. Below, we summarize key highlights of Yellen's testimony.