As a reminder here, the October meeting does not have a press conference after the summary notes are issued. And there is no November meeting, so that leaves the December Fed meeting as the next possible meeting for a potential rate hike.
Piegza’s take, since there is no meeting and no outlook issued, is that the financial market participants will have to use only the Fed’s official statement to decipher their updated assessment of current conditions and expectation for rates.
Her preview noted that the material slowdown across a plethora of sectors in the domestic economy should keep the Fed’s characterization of the economy in line with its September statement. Three things that are anticipated are as follows:
- A softening of the labor market language to reflect the dramatic slowdown in the pace of hiring over the past two months to the lowest quarterly pace since the second quarter of 2012.
- The Fed will maintain its concern of intentional events, as well as the acknowledgement of the realized — and further potential — downward impact on growth and inflation.
- The Fed will further recognize the additional decline in inflation and inflation expectations.
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Piegza said:
Those looking (hoping) for a clear indication that a rate hike by the end of the year is still in the cards are likely to be severely disappointed with this afternoon’s statement. We are looking for the status quo at best with the risk of a decisively more Dovish tone underlining policymaker’s growing fears of the downside risks to the Committee’s outlook for growth and inflation. We do not expect a rate increase in October, nor by the end of the year. Remember, the Committee’s hope for of a 2015 liftoff was based on an expectation of further momentum, not a commitment to a policy change independent of the evolution of the data. The economy has fallen short, thus policymakers are forced to remain on the sideline waiting for further domestic activity.
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