Fed: No major changes to inflation wordings despite low inflation – Danske Bank
|Analysts at Danske Bank suggest that in the FOMC statement, they will look for any new wordings on inflation, as low inflation remains the biggest obstacle for hiking further since growth remains above trend and employment continues to rise.
Key Quotes
“In July, the statement was changed from saying inflation ‘is running SOMEWHAT below’ 2% (our own emphasis) to just ‘running below’, which was interpreted as a smidgen dovish. Since then PCE core inflation has moved lower but the CPI data for August were more promising, as CPI core rose +0.2% m/m (and close to 0.3%), the biggest increase since February. Statements do not change much from meeting to meeting and we do not expect major changes at this meeting either, although risk is skewed towards a more dovish stance.”
“We think the statement will continue to say that the Fed is monitoring inflation ‘closely’. More interesting is Yellen’s press conference as in June she expressed confidence in the Phillips curve. However, if inflation continues to disappoint while labour market continues to tighten, it may be harder for her to justify this conviction. We do not expect big changes to the statement with respect to growth and the labour market.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.