FOMC: Rate hike, not this time – BNP Paribas

FXStreet (Delhi) – Alexandra ESTIOT, Research Analyst at BNP Paribas, suggests that today’s FOMC meeting is one with forecasts’ update and press brief, a good opportunity for policy change but necessary conditions are not always sufficient, and we do not expect the Fed to change its policy stance.

Key Quotes

“August’s financial turmoil is not the reason why. Admittedly, jittery financial markets reminded Fed officials that policy decisions can have huge impacts. This is reason for the Fed to try and be crystal-clear about future steps, not to postpone decisions otherwise seen as necessary.”

“Fed officials are increasingly uncomfortable with the zero-rate policy, especially with the unemployment rate down to the NAIRU estimated level. Still, with core inflation stable and low, an expensive dollar and no sign of accelerating wages, there is no reason to rush the normalisation.”