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U.S. Fed Watch September 2015

FOMC Statement: September 16 th – 17 th

  Author: Kim Chase
 September, 2015
  Price: Free 0.00


Dovish Views Dominate as FOMC Holds Back on Rate Hike

• Low inflation and global financial market volatility to blame for another FOMC delay
• A few members pushed out expectations for liftoff – now 3 votes in 2016 and 1 in 2017
• Focus shifts to December for the first hike as long as data evolve in line with Fed’s outlook

September’s FOMC statement showed the Committee’s true dovish colors, forcing us to wait again for the first rate hike since June 29, 2006. Details in the statement do not reveal any new reasoning behind the delayed rate hike, but instead reemphasize the need to see “some further improvement in the labor market” and to be “reasonably confident that inflation will move back to its 2 percent target over the medium term.” Immediately before the meeting today, the implied probability of a September rate hike had dropped to just 18% (from 30% a few days ago and a high of 60% in early June). In an effort to avoid any surprises, the delay aligns the Fed with
market expectations set prior to the meeting. 


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