HALISTER1: Fed Rate Hike in Sept. Still ‘A Distinct Possibility’: CapEcon

Fed Rate Hike in Sept. Still ‘A Distinct Possibility’: CapEcon

(Bloomberg) -- While FOMC is unlikely to “spring any surprises” at July 26-27 mtg, Sept. action is still possible, Capital Economics economist Paul Ashworth writes in note.
  • Statement should acknowledge pick-up in 2Q GDP growth, recent strength in consumption, rebound in employment growth in June
    • Consumption “has been on an absolute tear”
  • Fed won’t commit itself to Sept. rate hike in July, especially with Yellen speaking at Jackson Hole symposium on Aug. 26
  • While mkts may have largely dismissed global impact of Brexit, some Fed officials may “still be nervous” that it could have negative impact in future
  • Any sign of trouble in mkts between July and Sept. mtgs could make Fed shelve plans to hike until yr end
    • CapEcon still expects two hikes this yr, in Sept. and Dec., and rising inflation to lead to 4 hikes next yr
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Paul Ashworth (Capital Economics Na Ltd)

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