FOMC: Balance sheet announcement likely in September – HSBC

Sandeep Kanihama FXStreet Contributor

The FOMC left policy unchanged, as expected, at its policy meeting yesterday, but the Committee did, however, signal that the Fed will soon begin a program to disinvest some of the Treasury and mortgage-backed securities on the Fed’s balance sheet, notes Kevin Logan, Chief US Economist at HSBC.

Key Quotes

“We expect the FOMC to announce a disinvestment program at its next policy meeting in September and to commence the program in October. The Committee repeated that inflation “on a 12-month basis” is expected to remain below 2.0% in the near-term, but should stabilize “around” the Committee’s 2.0% objective in the medium term. The anticipation of an eventual rise in inflation should keep the FOMC on a gradual tightening path, in our view. We expect the next 25bp hike in the federal funds rate to come in December.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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