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Analysts at Deutsche Bank suggest that we have a  Fed meeting to look forward to this evening and the overriding consensus, both amongst economists and also in markets, is for no hike.

Key Quotes

“Our economists believe that the only “drama” about the statement will be around alterations to the Committee’s description of recent economic developments.  They note that the statement can continue to see the pace of economic growth and job gains as strong, and can acknowledge that the unemployment rate has declined further.”

“Household spending has continued to grow strongly as noted previously, but business investment has softened in recent months. The statement may make note of this, perhaps by using a phrase along the lines of: “Recent data suggest that growth of business fixed investment moderated from its strong first half pace.” Inflation will still be seen as remaining near 2%, with inflation expectations little changed on average despite recent declines in market-based measures.”

“An acknowledgement of recent tightening in financial conditions is unlikely. Outside of the statement, there will be some focus on whether or not the Fed make another “technical adjustment” by reducing the IOER by 5bps, to ensure that the fed funds rate continues to trade within its target range.”

“Our team think this will be deferred until December when they can again raise the IOER by 20bps, though the exact timing is not especially significant in terms of monetary policy. As such we’d expect a strong signal in today’s minutes.”