Fed holds, no specific guidance for December - ING

James Knightley, Senior Economist at ING, points out that today the Federal Reserve gave little in the statement to suggest that a December hike is definitely going to happen.

Key Quotes: 

“Policy left unchanged with limited changes to the FOMC text. Market still favouring December, but there is plenty of data to come and a lot of election outcome uncertainty that could yet change the odds on action.”

“Assuming Clinton wins, markets are likely to react with relief given expectations of policy continuity. This, coupled with the reasonably firm growth, rising employment and a gradual pick-up in inflation should reinforce market expectations for a December rate hike.”

“Should Trump win then this is likely to hurt market sentiment given uncertainty as to what he will actually do when in power. It is hard to imagine the Fed hiking in this environment. We also have plenty more data to come ahead of the December 14 FOMC meeting, including two more job reports so there are other reasons for caution.”

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