United States: The sin of certainty

November's FOMC meeting is expected to produce just one thing: a repeat of the Fed's November 2015 announcement when it pre-committed to raising key rates at its following meeting.

The Fed's intent can already be seen in September's announcements. Statements by the regional presidents of the Chicago and New York Federal Reserve Banks seem to confirm a shift in the FOMC's centre of gravity.

Wanting its communications to be as transparent as possible, the Fed will continue insisting on its gradual approach to the normalisation of monetary policy. In other words, a December rate increase would not necessarily mark the beginning of a series of rate increases.

Fine tuning seems to be the Fed's operating mode for the current cycle of rate increases, using a walrasian tâtonnement in order to narrow the gap between the Fed funds rate and the natural rate, without reaching it too quickly. This is no easy task: the natural rate is just as elusive as the output gap and the NAIRU.