Halister News

(Bloomberg) -- “The window of opportunity for a Fed rate hike has closed before the FOMC has a chance to meet, again,” Wrightson ICAP economist Lou Crandall writes in note.

• “No doubt” that Yellen will say at her press conference that Fed expects to tighten over time; yet hard for Fed to be “overly hawkish” since Sept. statement will need to explain why policy makers aren’t hiking this week
  • FOMC may decide statement should remain neutral, leave it to Yellen to deliver “close but not quite there yet” message
• While a “comfortable” majority on FOMC probably sees justification in at least a qtr-pt move at this point, ambiguity in near-term direction of economic data makes this a “ticklish” time to announce a hike
  • Fed would take a “reputational hit” if economic data remain ambiguous next month
• Dots will likely continue to show almost all FOMC members favoring at least one hike in 2016, along with slightly shallower tightening trajectory in 2017 and additional downward drift in estimates of long-run neutral rate
• FOMC’s forecasting record has become a “sore point for many”; tightening in middle of what turned out to be a “soft” spell of data “would not be helpful to the institution”
• A Nov. hike “is not very plausible”; in absence of “extreme data outcome,” Fed should “keep its head down” in wk before a presidential election