My One Academy: FOMC Preview: September 20-21 Meeting

Monday, September 19, 2016

FOMC Preview: September 20-21 Meeting

Economic Research

19 September 2016

UNITED STATES

Economic Highlights

FOMC Preview: September 20-21 Meeting

The recent jump in longer-term Treasury yields and the spike in financial market volatility have generated some lingering anxieties in financial markets ahead of this week’s FOMC meeting. Despite relatively modest market implied odds for a rate hike at the September 20-21 meeting (kindly refer to chart 1), typically consistent with an unchanged policy decision and minimal surprises in the past, consensus surveys are not unanimous at this juncture. Still, the FOMC’s inclination to deliver a surprise rate hike, as best we can judge, should be quite limited in the current environment. Broadly, we think that the FOMC will attempt to preserve the conditional prospect of one rate hike this year with hawkish undertones in the September statement but a slightly more compressed projected rate path (from the updated dot-plot). Naturally, we also anticipate Chair Yellen to reiterate that future policy decisions will be data dependent and made meeting-by-meeting. At the conclusion of the two-day September meeting, we expect the following in the post-meeting statement and accompanying projections:

Economist: Thomas Lam | +65 6533 0389

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Economics Team

Lim Chee Sing

Chief Economist

cslim@rhbgroup.com