HALISTER1: FOMC’s July Minutes May Start Clock on Dec. Rate Hike: UBS

FOMC’s July Minutes May Start Clock on Dec. Rate Hike: UBS

(Bloomberg) -- FOMC appears to be preparing mkts for rate hike later this yr, given July statement “marked the return of the risk statement,” UBS economists Drew Matus, Dave Liang and Samuel Coffin write in note.
  • Reference to near-term risks as having diminished is FOMC’s 1st statement of risks since Dec.
  • If UBS is correct, July was “start of the clock” for a yr- end rate hike
    • Yellen’s Jackson Hole speech next wk should reinforce that view before Sept. mtg
  • FOMC’s Sept. statement and projections should confirm that Dec. hike is most likely scenario
  • Views of SF Fed Pres. John Williams aren’t likely to significantly alter Fed’s near-term policy path, even if he was asking for an immediate shift
    • NOTE: In economic letter released Mon. by SF Fed, Pres. John Williams calls for possible higher inflation target or nominal GDP targeting to mitigate impact from lower natural rate of interest
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Drew Matus (UBS Asset Management Japan Ltd)
Samuel Coffin (UBS Global Asset Management Japan Ltd)
David Liang (UBS Securities LLC)
John Williams (Upland Resources Inc)

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