Fed will not change its monetary policy - Rabobank
|Analysts at Rabobank point out that it is widely expected that the Fed will not change its monetary policy at the November meeting.
Key Quotes
“We would not be surprised to see another tweak in the IOER rate before the end of the year. The December meeting would be the most logical moment.”
“We think that the FOMC has become overconfident. Blinded by strong coincident and lagging indicators, such as strong GDP growth and low unemployment, the Fed is dismissing an important leading indicator in the form of the yield curve, which is heading for an inversion if the Fed keeps up the current pace of rate hikes.”
“Our baseline scenario for next year is a single Fed hike in March 2019, followed by an inversion of the curve in Q2. The latter would lead to a pause in the Fed’s hiking cycle, because the FOMC would interpret this as a sign that monetary policy is mildly restrictive. In contrast, we think that this will be the end of the Fed’s hiking cycle as recession risk becomes elevated. The inversion would signal a recession in the fall of 2020.”
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.