Fed on Track for December Rate Hike
|U.S. Review
Fed on Track for December Rate Hike
- The FOMC voted unanimously this week to maintain the target range for the federal funds rate at 2.00%-2.25%, a decision widely anticipated by market participants. All signs point to a rate hike at the December meeting.
- Midterm elections ushered in a divided government, which is inherently less conducive to sweeping change. As such, we see limited potential for an extension of fiscal stimulus.
- Data released this week affirmed the FOMC’s assessment of the economy as strong. The ISM non-manufacturing index continues to indicate robust expansion and JOLTS data reflected a labor market that is growing historically tight.
Global Review
Challenges Persist in the Global Economy
- Chinese foreign exchange reserves fell by nearly $34 billion in October, the third consecutive monthly drop amid continued pressure on the yuan.
- With the Bank of Mexico set to meet next week, both headline and core consumer price inflation remains above the central bank’s target.
- Real GDP in the United Kingdom accelerated in Q3, growing at a 2.5% annualized pace, the fastest since Q4-2016. More ominously, total business investment declined at a 4.8% annualized rate in Q3 and is now down 1.9% year-over-year, the largest decline since Q1-2016.
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