US: FOMC Minutes kept the cautious tone – UOB
|Senior Economist at UOB Group Alvin Liew comments on the latest publication of the FOMC Minutes of the November 1 meeting.
Key Takeaways
In the US Federal Reserve’s latest 31 Oct/01 Nov FOMC minutes release (which was brought forward by one day due to the upcoming Thanksgiving holidays), the key takeaway was that Fed policymakers were reluctant to declare the end of the rate hike cycle as they still see upside inflation risks and what was most apparently missing in the minutes was any conversation about possibility of rate cuts next year.
FOMC Outlook – No Change To Our View Of Extended Pause Till Mid-2024. The latest minutes did not generate much market reaction as it did not take the risk of more hikes off the table or did it explicitly warn of new hikes in the immediate future. As such, we maintain our projections, expecting the Fed to keep its current Fed Funds Target Rate (FFTR) unchanged at 5.25-5.50% in Dec 2023 FOMC and maintain this terminal FFTR level till mid-2024 when we price in 75 bps of rate cuts for 2024 (i.e. three 25-bps cuts in Jun 24, 3Q24 and 4Q24).
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