Halister News

(Bloomberg) -- Fed policy makers aren’t likely to hint at timing of next rate increase at July 26-27 mtg in Washington, though better economic data suggests central bank could still hike at least once this yr, based on published research by economists and strategists.

• Commentary below about FOMC’s next mtg and U.S. monetary policy outlook; Sept. or Dec. seen as possible for next rate increase
• Fed funds futures fully pricing next rate hike in Oct. 2017; Oct17 implied rate 62.5bps, midpoint of 50-75bp target range

• Barclays (Michael Gapen)
  • Fed officials will wait until after Aug. 5 release of July jobs report before using public remarks to signal gradual hikes
  • Story link
  • Don’t expect signal about next hike to come at Fed’s July 26-27 mtg; Yellen’s appearance at Jackson Hole in late Aug. is “more likely time for a shift in tone”; more

• BNP (Paul Mortimer-Lee, others)
  • “Decent chance” rate hike could come as soon as Sept., following upward revision to U.S. GDP growth est. and easing financial/monetary conditions
  • BNP previously expected no Fed rate increases in 2016 or 2017
  • Story link

• Capital Economics (Paul Ashworth)
  • Fed rate hike in Sept. is “still a distinct possibility”
  • FOMC is unlikely to “spring any surprises” at July mtg or commit itself to a Sept. move
  • Statement should acknowledge pick-up in 2Q GDP growth, recent strength in consumption, rebound in employment growth in June
  • Story link

• Deutsche Asset Management (Joshua Feinman)
  • Fed most likely to move rates in Dec., tread carefully
  • For Fed to hike again, there would need to be signs that global/financial mkt risks post-Brexit “are remaining in abeyance,” labor mkt is healing, inflation is stabilizing or heading higher
  • “Picture will come into focus” enough for Fed to act before end of yr
  • Story link

• Morgan Stanley (Ellen Zentner, Matthew Hornbach, others)
  • Statement to reflect lack of consensus at Fed, as policy makers drift apart after Brexit and given uncertainty about U.S. growth/inflation outlook
  • Fed should say that “appropriate policy accommodation” will support economic activity, drop reference to “gradual adjustments”
  • Story link