US: Do not expect the Fed to take action - RBS

Research Team at RBS, suggests that they do not expect the Fed to take action, as the case for moving six weeks before the election without clear and compelling justification is weak.

Key Quotes 

“However, the FOMC is expected to signal that the door for a rate hike this year remains wide open, via changes to the statement (e.g. by indicating that risks to the outlook are now “nearly balanced”) and the “Dot Plot” (which we believe will show most participants’ preference for one or more rate hikes this year).

Chair Yellen may also reiterate in her press conference that the case for an increase in the funds rate has strengthened. Despite the Fed’s best efforts to prep the markets, the December meeting is a long three months away, and it remains to be seen whether economic conditions between now and then will allow the Fed to follow through on its plan.

At this time, our US strategists continue to assign no better than even odds that the Fed hikes interest rates this year.”