FOMC preview - Nomura

Analysts at Nomura offered a preview of the FOMC meeting ahead.

Key Quotes:

"We expect no change in the policy rate at the upcoming 30-31 January FOMC meeting and no material changes or surprises in the post-meeting statement. Incoming data during the intermeeting period have been largely positive, affirming continued growth above potential. 

December’s employment report indicated that the economy added more than enough jobs to absorb new labor market entrants and the unemployment rate remained at 4.1%.

Inflation on a 12-month basis continued to run below the FOMC’s target of 2% while December’s core CPI reading indicated some firming of trend inflation towards the Committee’s objective. 

Therefore, we do not think the Committee will make any major changes to the first paragraph on the current assessment of recent economic developments. That said, as the impact from inclement weather last summer wanes, the Committee may drop the language on hurricanes. There is no press conference scheduled after the January meeting, thus the Committee will likely refrain from making material changes to policy-related paragraphs in the statement besides minor tweaks. 

As the first meeting of 2018, the composition of voters in the FOMC will change, with Chicago Fed President Evans, Philadelphia Fed President Harker, Dallas Fed President Kaplan and Minneapolis Fed President Kashkari replaced by Cleveland Fed President Mester, Richmond Interim Fed President Mullinix (soon to be replaced by Thomas Barkin), Atlanta Fed President Bostic and San Francisco Fed President Williams. Finally, this will likely be Janet Yellen’s last meeting as Chair before her term ends 3 February 2018."