78% chance of Fed hike at Dec meeting - CME Group's FedWatch
|Following comments from both Yellen and Fed's Bostic, Federal Funds Futures imply traders see a 78% chance of a Fed hike at Dec meeting according to CME Group's FedWatch
- Gradual approach to hikes particularly appropriate in light of subdued inflation, low neutral rate
- Imprudent to leave rates on hold until inflation reaches 2%
- Can still achieve 2% target goal even if fed is underestimating slack or overestimating inflation expectations
- Low inflation likely due to transitory factors, sees many uncertainties
- Downward pressure on inflation could prove unexpectedly persistent
- Considerable' odds that inflation won't stabilize at 2% over next few years
- Risk that inflation expectations are not as well-anchored as they appear
- Data suggests labour mkt is healthy, without substantial slack & not overheated
- Evidence on labour mkt not definitive, says Fed must be 'open-minded'
- Even after hurricanes, above 2% GDP expectation is reasonable
- Pace of job creation in the US remains strong
- Not overly concerned about asset price bubbles
- Want "clear evidence" inflation is rising to Fed's 2 percent target
- Attributes recent low inflation to remaining weakness in labor market, sign recovery is continuing
- Weak wages also a sign that slack remains in the labor market
- Do not regard monetary policy as "too loose" for current economic conditions or that it is feeding asset bubbles
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