We expect the Fed to raise rates gradually in 2016, before

We expect the Fed to raise rates gradually in 2016, before moving to faster hikes as the forces for going slow fade... Main drivers for the Fed Global growth Labour market strength Dollar strength Low oil prices Richer rates Deutsche Bank Researdi • Moderate pace • Marginal pick-up in 2016 and 2017 • At full employment, to tighten more • Wage inflation low but rising * +25% since mid- 2014 • Further strength, at slower pace • -50% in 2014, -25% in 2015 • Limited further downside in 2016 • Potential for sharp rise if market prices Fed path in 2016 Impact on US Sign Size Inflation Growth 2016 After e n.a. S. L O 0 0 ------ (1) in H1 Impact High Q Medium Fed's assessment of pace of hikes Inflation Financial conditions 2016 After • Firming in H1 but • More clearly rising downside risks in H2 toward Fed target • Kept low by growth • Higher as headwinds headwinds, low fade, productivity potential growth growth rises Tightening given • Tightening continues dollar strength, higher but at lower rate rates • Fed committed to • After a few hikes, L Other gradual hikes arguments for • Slow tightening to continuing slow less avoid recession** compelling "sr Pace of L Low hikes Slow and gradual More rapid. to ward-off inflation 8 Notes. (5 Theoretical policy rate that keeps economy at full employrneM and inflation on target. A higher neutral rate requires more hares in the same period of line. (—) Al zero rates, easing options are more limited, so the Fed needs lo be more cautious as it raises Fates. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0119255 SDNY_GM_00265439 EFTA01459045