The Federal Reserve's Federal Open Market Committee (FOMC) meets October 27 and 28 this week, here is a quick preview from Goldman Sachs
- We do not expect significant changes in the October FOMC statement.
- The statement is likely to acknowledge slower payroll gains while still describing growth as "moderate."
- We would view such an outcome as indicating that, despite the weaker-than-expected recent data, the leadership's baseline for liftoff remains December.
- The October meeting is unlikely to resolve questions about recent dovish comments from Governors Brainard and Tarullo.
- Although their comments have been widely interpreted as implying that a hike this year is unlikely, we instead see their remarks as reflecting reasonable and predictable disagreement, and we continue to expect liftoff in December, though only with 60% confidence.
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Goldman Sachs refer to comments from Brainard (Fed's Brainard dropped a policy bomb today, and an outright challenge to Yellen ) and Tarullo (Fed's Tarullo on CNBC: Right now, expectation is not appropriate to raise rates), saying the meeting this week is "unlikely to resolve questions about recent dovish comments from the two". Mmmm .... I'd even argue that Vice-Chair Fischer is perhaps swinging that way ("He is beginning to lay the groundwork for a potential big back-pedal from the Committee" ).
Oh, on the weekend I posted: Stick this in the diary: December 3-Yellen fronts Congress pre-FOMC ... I reckon the most important part of that was:
- If you're sick of hearing about the Federal Reserve, next week might be a good time for a holiday.
I recommend a beach in Queensland somewhere.
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The FOMC meet October 27 and 28, with the announcement due at 2pm US eastern time on the 28th (1800GMT).
