28 Oct 2015
Fed leaves December rate hike door “wide” open – Rabobank
FXStreet (Córdoba) - Philip Marey Senior US Strategist at Rabobank, notes that the Federal Reserve statement removed the phrase about global concerns and added that it will determine “whether it will be appropriate to raise the target range at its next meeting”. Both changes, according to Marey, left the door “wide open” for the Fed to raise rates in December.
Key Quotes:
“As widely expected, the FOMC did not hike today. However, they did leave the door open to a December rate hike. In fact, we might say ‘wide open’. The repetition that the Committee would like to see ‘some further improvement’ in the labor market and it would like to be ‘reasonably confident’ that inflation will move back to its 2 percent objective over the medium term was not surprising. This left the door open to a December hike.”
“However, what left the door wide open was the removal of the sentence ‘Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.’
“While the FOMC continues to monitor global economic and financiaI developments, it seems that the Committee is not very impressed by the negative impact on the US economy from the global turmoil so far."
“Today’s FOMC statement supports our view that the economy is close to the Fed’s finish line, and that it will take more evidence of a negative impact from global developments on the US economy to convince the majority in the FOMC to delay the first rate hike to next year. If this evidence does not arrive, the Fed is going to hike in December.”
Key Quotes:
“As widely expected, the FOMC did not hike today. However, they did leave the door open to a December rate hike. In fact, we might say ‘wide open’. The repetition that the Committee would like to see ‘some further improvement’ in the labor market and it would like to be ‘reasonably confident’ that inflation will move back to its 2 percent objective over the medium term was not surprising. This left the door open to a December hike.”
“However, what left the door wide open was the removal of the sentence ‘Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.’
“While the FOMC continues to monitor global economic and financiaI developments, it seems that the Committee is not very impressed by the negative impact on the US economy from the global turmoil so far."
“Today’s FOMC statement supports our view that the economy is close to the Fed’s finish line, and that it will take more evidence of a negative impact from global developments on the US economy to convince the majority in the FOMC to delay the first rate hike to next year. If this evidence does not arrive, the Fed is going to hike in December.”