16 Dec 2014
FOMC expected to change its language in its statement – FXStreet
FXStreet (Barcelona) - FXStreet Analyst, Craig Drake, notes that high expectations revolve around Fed’s Wednesday meeting for a shift in its language, with the phrase “considerable time” anticipated to be dropped out of Fed’s communication.
Key Quotes
“The big expectation for the conclusion of the Federal Reserve’s Federal Open Market Committee meeting is for a shift in language. The FOMC is expected to drop the phrase “for considerable time” in reference to maintaining near-zero rates in favour of an emphasis on patience.”
“As part of the Fed’s reliance on forward guidance (something ushered in by Janet Yellen when deputy chairman of the Fed), the Fed has repeated the statement that “it likely will be appropriate to maintain the 0 to 0.25 percent target rate for the federal funds rate for a considerable time” after the end of its asset purchase programme – with the “considerable time” emphasis something that has been in place since 2012.”
“90-day Eurodollar implied probabilities of a Fed funds rate hike is being priced around mid-2015 in line with conservative consensus expectations from the majority of the big bank forecasts, however, we may see this being pushed later into the third quarter of 2015, with the Fed seemingly in no hurry to abandon its current ultra-loose monetary conditions despite an official Fed forecast of 2.8 percent GDP growth in 2015.”
“The Fed is also expected to downplay declines in inflation in view of recent sharp declines in oil prices”
Key Quotes
“The big expectation for the conclusion of the Federal Reserve’s Federal Open Market Committee meeting is for a shift in language. The FOMC is expected to drop the phrase “for considerable time” in reference to maintaining near-zero rates in favour of an emphasis on patience.”
“As part of the Fed’s reliance on forward guidance (something ushered in by Janet Yellen when deputy chairman of the Fed), the Fed has repeated the statement that “it likely will be appropriate to maintain the 0 to 0.25 percent target rate for the federal funds rate for a considerable time” after the end of its asset purchase programme – with the “considerable time” emphasis something that has been in place since 2012.”
“90-day Eurodollar implied probabilities of a Fed funds rate hike is being priced around mid-2015 in line with conservative consensus expectations from the majority of the big bank forecasts, however, we may see this being pushed later into the third quarter of 2015, with the Fed seemingly in no hurry to abandon its current ultra-loose monetary conditions despite an official Fed forecast of 2.8 percent GDP growth in 2015.”
“The Fed is also expected to downplay declines in inflation in view of recent sharp declines in oil prices”