US FOMC: Fed Stays On Hold In Sep On Global Concerns
§ The Fed kept its ultra-low rates policy unchanged in Sep, even as Yellen maintained that rate liftoff remains on course in 2015 but highlighted global developments worries on the rise while domestic inflation are pressured lower.
§ The Fed's 2015 GDP growth forecasts were upgraded while unemployment expected to improve more in 2015-2017 with inflation projections are more dovish compared to June. The September dot-plot chart points to an even more gradual rate liftoff trajectory while there are now 4 FOMC participants (out of 17) who assessed that policy tightening should be appropriate only after 2015 (up from just two participants in June 2015).
§ We now expect the first Fed rate hike to take place in the 15-16 December 2015 FOMC and we further revised lower the rate trajectory, expecting the FFTR to reach 0.5% by end 2015, and 1.5% by end 2016. We ruled out the liftoff taking place in October FOMC because we expect the potential a repeat of the US government shutdown & US debt ceiling limit drama in October/November could complicate Fed monetary policy decision making just like what happened to Bernanke in 2013.
Global Economics & Markets Research
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