FOMC to raise the federal funds rate by 25bp

HSBC Analysts offered their thoughts on what the Federal Reserve (Fed) is likely to announce at its final monetary policy meeting of this year.

Key Quotes:

“We expect the FOMC to raise the federal funds rate by 25bp

Minneapolis Fed President Neel Kashkari is likely to dissent in favor of leaving rates unchanged, as he did in March and June. It is possible that Chicago Fed President Charles Evans could also vote against the rate hike; this would be his first dissent this year.

We do not expect any major surprises from the policy statement.

The statement will probably repeat that economic activity has been rising at a solid rate, while dropping earlier references to hurricane-related disruptions.

The FOMC will likely repeat that near-term risks appear roughly balanced and that inflation developments will be monitored closely.

Finally, the statement will likely reiterate the guidance that the Committee anticipates gradual increases in the federal funds rate.

We expect the FOMC's median projection for GDP growth to be lifted slightly for the next several years.

The projection for 2017 could be increased to 2.5%, up from 2.4% in September.

The 2018 projection could be raised to 2.3% from 2.1%,

And the 2019 projection could be raised to 2.1% from 2.0%.

We expect the FOMC's median projection for unemployment at the end of 2018 to be lowered slightly to 4.0% from 4.1%.

We expect the FOMC's median projection for policy rates at the end of 2018 to remain at 2.1%, implying three 25bp rate hikes over the course of next year.

This will be Ms Yellen's final post-meeting press conference as Fed Chair.

She is likely to strike a balanced tone with respect to the future course of policy, continuing to endorse the FOMC's message that gradual rate hikes are likely to be warranted in the coming year.“

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.