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FOMC Preview: 9 major banks expectation from August meeting

We are closing into the FOMC’s August policy decision and as the clocks tick closer to the decision timing, following are the expectations as forecasted by the economists and researchers of 9 major banks along with some thoughts on the future course of Fed’s action.

Most economists and analysts expect the FOMC to keep the rates on hold this month nut suggest that there is the potential for the Fed to offer some clues for its policy leaning later in the year.

Goldman Sachs

“The FOMC is set to leave rates unchanged “¦ Nonetheless,  we expect an upbeat statement consistent with a September hike, given solid US growth data and stable financial conditions in the face of rising trade uncertainty.’

“While tariff concerns seem to be on the rise among Fed officials, most seem to believe that these concerns have not yet affected growth or materially changed the economic outlook.”

“Reflecting the upbeat growth picture, we expect the  post-meeting statement to retain most of the positive characterizations from the June meeting, referring to growth as “solid,” job gains and business investment as “strong,” and consumer spending growth as having “picked up.”  

“While we expect a nod to the higher June unemployment rate, the  tweaks are likely to be relatively minor  (to “has stayed low” from “has declined”), particularly because wage growth measures have been stable-to-higher in recent months.  

“¦ Powell’s “for now” comment last week would seem relevant to the “gradual increases” policy rate guidance, we doubt this section of the statement will be modified.”


“We believe that the Fed is likely to read the Q2 GDP report as we do. We see participants as discounting the contribution from trade given the policy uncertainty and focusing their attention on final sales to domestic purchasers. On net, it is likely that the committee will conclude that stimulus is passing through to activity as anticipated.”

“The August FOMC comes without a press conference or updated projections, leaving the FOMC statement as the only medium of communication.  We think the main message will remain unchanged; in the face of sizeable stimulus, improving labor markets, and steadily firming inflation, further gradual rate hikes remain the most likely outcome.”

“We expect two further 25bp rate increases this year, in September and December.”

“The  committee is also likely to debate further language changes to the statement, particularly regarding the assessment of the stance of policy and to what degree the committee wants to provide forward guidance about further gradual rate increase, but we see these changes as more likely to come closer to year-end.”


“The FOMC is widely expected to leave rates unchanged in August and we do not expect any material changes in the policy statement, with only a mark-to-market update to reflect recent pickups to growth and inflation. We do not expect any dissents for a rate hike or changes to the balance of risks.”


“It is often the case that market participants are biting their nails ahead of a Fed meeting. Today’s offering from the FOMC, however, is not expected to offer much in the way of new news.   The markets is almost fully priced for a September rate hike and today’s announcement is merely expected to re-affirm the Fed’s hawkish guidance.   That said, there is the potential for the Fed to offer some clues for its policy leaning later in the year.”

“The Fed may be tilted towards hiking for a fourth time this year in December but, despite the strength of US GDP growth in Q2, this is far from a done deal.”

“The flatness of the yield curve has clearly been a concern to some Fed watchers. This factor combined with the still moderate pace of wage growth and core PCE inflation suggests that the Fed could yet be persuaded to pass on a fourth rate hike this year.   Although this is in line with our view, this decision will ultimately depend on the evolution of economic data.”

Danske Bank

“Analysts at Danske Bank expect the Fed to maintain the target range at 1.75-2.00% at the upcoming meeting on Wednesday.”

It is one of the small meetings without updated projections or any press conference. The only piece of information we will get is the statement, but it does not change much from meeting to meeting.”

“It is  unlikely to send any new policy signals. This was also the case during Fed Chair Powell’s hearing not long ago.”

“We still think the Fed is on track to deliver two more hikes this year (September and December),  which is in line with the Fed’s own projection (although the committee is divided between one and two hikes) and market pricing.”

We do not expect any major shifts in the communication on the balance sheet either.”

Deutsche Bank

“No change in policy is expected and as a reminder this is a meeting that doesn’t have a press conference, nor a fresh summary of economic projections so the only focus really will be on cosmetic changes to the statement.”

Our US economists expect a fairly uneventful statement with the only real change perhaps being an acknowledgement of some recent softness in housing market data.  As a complement to June’s removal of forward guidance language, the statement could also include some language such as the phrase “for now” featured in Fed Chair Powell’s recent monetary policy testimony.”

“Our colleagues believe that including such verbiage would have the effect of including some uncertainty into the Fed’s gradual rate hike mantra. The team take the addition of such language as another way to de-emphasise forward guidance and reiterate that their actions are data dependent. Anyway, we’ll know more at 7pm BST tonight.”

Nordea Markets

“Rates will be left unchanged at 1.75% – 2.00%, while there will be neither a press conference nor new forecasts. The June statement was already upbeat, and fully in line the next rate hike taking place in September.”

“Given that also the y/y change in the core PCE has hit 2%, the Fed could tweak the part about  inflation for items other than food and energy have moved close to 2 percent  to take account of that fact. If anything, the strong Q2 GDP data favours even more upbeat language on the economy, though activity was characterized as  solid  already in June.”

“Even if mounting concerns about global trade policy were mentioned in the June meeting minutes, they were left out of the June statement. They are likely to remain absent also in the July statement. In general, changes to the statement are set to be minimal.”

“Though unlikely, a dissent in favour of a rate hike is not totally impossible. After all, the most hawkish FOMC participant projected three further hikes for this year in June vs the median forecast of two.”

“We continue to expect two more 25bp hikes this year, one in September and the other one in December, which is slightly more than the current market pricing. For next year, we look for three further hikes, which is clearly more than the market is currently pricing in.”


“We do not expect any major developments at the July/August FOMC meeting. However, it is possible that the post-meeting statement will add “for now” when describing the FOMC’s plans for “further gradual rate increases,” consistent with Powell’s prepared remarks at his semiannual testimony.”

“This subtle change in language would be consistent with the Committee’s continued pullback from forward guidance language employed during the aftermath of the Global Financial Crisis.”

“The economic backdrop for the July/August meeting, with a solid Q2 GDP reading and reduced trade tensions between the US and EU, will likely be positive, despite continued elevated trade tensions between the US and China.”


“According to analysts at Westpac, the US Fed is most likely to keep rates unchanged but reiterate its recent messages around the growth and inflation outlook and the prospects of more rate hikes in a gradual cycle.”

“That should not shift market expectations too much, although it will focus attention on a hike in September and potentially consolidate expectations around December.”

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