The Weak Link In the FOMC's Rate Plans
Friday’s US jobs report was very supportive of economic growth in Q3. Robust labor markets are essential for consumer spending and housing - two key drivers of US economic growth.
However, it remains unclear whether inflation will get new momentum to push higher. Core PCE inflation, for example, has stalled at 1.6% for the last four months after rising sharply earlier in the year. Furthermore, inflation expectations remain well below the Fed’s 2% inflation objective. Indeed, inflation is the weak link in the FOMC’s rate plans!
Today’s employment data will almost certainly put a rate hike “on the table†at September’s FOMC meeting. however, we do not expect the Fed to pull the trigger just then for several reasons:
- Inflation remans subdued
- Further easing by foreign central banks tightens US financial conditions
- Money market reforms are creating some turmoil in funding markets
MIG provides investors with clarity on markets, macro and monetary policy. It combines a rigorous analytical approach with unique insight into central banks based on over a decade of experience. Clients appreciate our clear and accessible communication style
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.