Halister News

(Bloomberg) -- “The Fed is in a very cautious mood” and Dec. remains the most likely time for a rate hike given recent choppy data and financial market turmoil, BofAML’s head of global economics research, Ethan Harris, said in phone interview Fri.

• “December has been the most likely month for them to move, and still is”
• Jobs number Fri. canceled out disappointing GDP data
  • Weakness in GDP in 1H reflected temporary effect of firms cutting back on very high inventory building
• “The call on the Fed is about ‘checking all the boxes’”; “If growth remains on track, the pickup in inflation sticks and there is no big shock to markets, then the Fed waits to be sure and hikes”
• “September is not completely off the table. It’s possible. But September has always been a relatively low probability,” given mkt volatility
  • “The fact that markets have shrugged off Brexit and there’s been no spillover into the U.S. makes us feel a little more comfortable that the Fed would think about hiking in September,” relative to BofAML’s forecast in June
  • “We’re more comfortable than less comfortable about the outlook and see some chance of a move in September. But, really, December feels about right to us”