The following is Credit Suisse's preview for next Wednesday's July FOMC meeting.
The Federal Open Market Committee next convenes July 29-30. There are no forecast updates or press briefings associated with next week’s meeting. The Committee simply will release a policy statement at 2:00 p.m. on July 30.
Better economic news and faster inflation readings will motivate a continued slow march among Fed officials toward an eventual rate hike.
We do not expect any significant changes in the stance of policy or any other policy innovations as soon as next week’s FOMC meeting. In fact, we may still be months away from the more balanced rhetoric from Fed Chair Yellen that presumably would set the stage for the eventual policy rate ”lift-off” from the zero bound.
There are good reasons to expect the core decision makers on the FOMC to exercise more patience than the markets before initiating the next tightening cycle. And when they do hike rates, their intention will not be to make policy “tight.” That said, better US economic performance of late has persuaded us to pull forward our forecast for the Fed’s first rate hike to Q3 2015 from Q4 2015.
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