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14 Dec 2015
Gearing up for the US FOMC's rate decision - Investec
FXStreet (Delhi) – Research Team at Investec, is previewing the Fed meeting itself and analysing the market expectation ahead of this historic decision.
Key Quotes
“This week is set to witness one of the most eagerly anticipated monetary policy decisions in years, with the FOMC’s December announcement due at 7pm (UK time) on Wednesday. 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 we 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 own forecasts. Therefore Yellen’s comments during the press conference could be as relevant for markets as the actual decision.”
Key Quotes
“This week is set to witness one of the most eagerly anticipated monetary policy decisions in years, with the FOMC’s December announcement due at 7pm (UK time) on Wednesday. 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 we 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 own forecasts. Therefore Yellen’s comments during the press conference could be as relevant for markets as the actual decision.”