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14 Dec 2015
All roads lead towards Fed this week – Investec
FXStreet (Delhi) – Research Team at Investec, suggests that one of the most eagerly anticipated monetary policy decisions in years will happen on Wednesday this week.
Key Quotes
“October’s statement specifically noted that the committee would assess whether it would be appropriate to raise the target rate at the ‘next meeting’ based on progress towards the Fed’s objectives on full employment and price stability. Since then the labour market has continued to tighten, with payrolls averaging 255k over the two months, with Chair Janet Yellen stating that the Fed’s expectations had been met. As such our economists believe the Fed is set to raise rates for the first time since June 2006, taking the Federal Funds Target range up 25bps to 0.25% - 0.50%.”
“Away from the actual decision the bigger question is how the Fed defines a ‘gradual’ pace of tightening, with markets currently pricing in a slower pace of tightening than both the Fed’s last ‘dot plot’ and our economists’ forecasts. Therefore Yellen’s comments during the press conference could be as relevant for markets as the actual decision.”
“Whilst the FOMC’s December announcement will grab all attention this week, there are still a number of important US releases including November inflation figures and Empire State manufacturing (tomorrow) and surveys from the Philly Fed (Thursday), as well as housing related figures (Wednesday).”
Key Quotes
“October’s statement specifically noted that the committee would assess whether it would be appropriate to raise the target rate at the ‘next meeting’ based on progress towards the Fed’s objectives on full employment and price stability. Since then the labour market has continued to tighten, with payrolls averaging 255k over the two months, with Chair Janet Yellen stating that the Fed’s expectations had been met. As such our economists believe the Fed is set to raise rates for the first time since June 2006, taking the Federal Funds Target range up 25bps to 0.25% - 0.50%.”
“Away from the actual decision the bigger question is how the Fed defines a ‘gradual’ pace of tightening, with markets currently pricing in a slower pace of tightening than both the Fed’s last ‘dot plot’ and our economists’ forecasts. Therefore Yellen’s comments during the press conference could be as relevant for markets as the actual decision.”
“Whilst the FOMC’s December announcement will grab all attention this week, there are still a number of important US releases including November inflation figures and Empire State manufacturing (tomorrow) and surveys from the Philly Fed (Thursday), as well as housing related figures (Wednesday).”