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Fed rate hike timing not sure – BBH

FXStreet (Delhi) – Research Team at BBH, suggest that a rate hike this month was never regarded as a likely possibility and the reasons the Fed cited last month for not hiking had nothing to do the labor market, but with global developments and the low market-based measures of inflation expectations.

Key Quotes

“In addition, despite the denials by Fed officials, we suspect that not having a scheduled press conference poses an obstacle to making it a likely candidate for the initial hike. It is true the Fed could call an impromptu press conference, but as soon as word got out, and it must be assumed it would, it would steal the Fed's thunder, and deny it an element of control. This may be acceptable for future hikes, but the first is special.”

“A broad array of economic indicators, including consumption, the strongest auto sales since 2005, and some other labor market indicators point to the continued relative strength of the US economy. The vagaries of quarterly GDP, notwithstanding, based on the current information set, we suspect the Fed's leadership regards the first two scenarios as most likely, with the third scenario being more a risk than a baseline forecast. This is to say that the majority of the Fed officials will likely continue to anticipate a hike in December.”

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