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The Federal Reserve (Fed) is expected to leave its policies unchanged in a decision due out at 19:00 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of nine major banks regarding the upcoming central bank’s decision. The Fed previously pledged to keep interest rates low at least through 2022. Jerome Powell, Chairman of the Federal Reserve, will address the press and his tone about the economy will be closely watched. 

SEB Bank

“We expect the Fed to repeat that it stands ready to adjust its policy as needed but think that policy changes will wait until December, at the earliest. However, if the Fed were to decide to act next week, a shift of bond purchases to the longer end of the curve and/or clearer guidance on future QE is the most likely outcome.”

TDS

“We don’t expect any new policy announcements and changes to the wording of the statement are likely to be minimal, but potential changes to the QE program and associated guidance will likely be discussed. We expect the Fed to make the QE program more accommodative by increasing the average maturity of purchases, but not yet.”

RBC Economics

“The US Fed is expected to leave monetary policy unchanged at the FOMC meeting, but will likely reiterate a willingness to do more to support the economic backdrop if needed.”

ING

“Health fears could see consumers voting with their feet and disengage with the economy by not going to restaurants, bars or shops. This is likely to mean the Fed retains its dovish bias with a promise to stand by and offer more stimulus if required. We would expect to see them reiterate the point that fiscal policy is a more effective tool at this juncture.”

NBF

“With benchmark rates down to what many policymakers see as the effective-lower bound, we don’t expect any changes on that front. Unconventional policies should also remain unchanged, with the Fed once again pledging to keep rates at current levels ‘until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time’. The Fed should also reiterate its intentions to increase its holdings of Treasuries and agency mortgage-backed securities “at least at the current pace to sustain smooth market functioning”. The statement could acknowledge better-than-expected economic data while reiterating significant downside risks.”

Westpac

“Our expectation is then that the November meeting communications will focus more on the immense uncertainty before the US and global economy than the gains to date. – From the inflation and labour market data to hand, there is already a case for additional easing. If the US’ own case count continues to rise further into winter, putting at risk the recovery, and/or Europe’s prospects deteriorate further, this will become all the more the case between the November and December meetings.”

Rabobank

“The FOMC meeting will take place in a volatile environment, just after Election Day, while the country is dealing with another resurgence of covid. What’s more, we are still waiting for an extension of the fiscal stimulus. The election outcome could determine whether the Fed will have to provide more monetary policy accommodation to offset any shortfall in fiscal policy support to the economic recovery. For Fed Chairman Powell there is more at stake than fiscal stimulus in this election week. After all, his first term as Chair expires on 5 February 2022.”

Danske Bank

“While it is too early for the Fed to really have digested the election result, the pressure is increasing on the Fed to deliver more easing, as more fiscal aid has yet to arrive (which was pencilled in the September projections) and other central banks are under more pressure as well. If the final Congressional election results show a divided Congress, we expect the Fed to increase its bond-buying pace but probably not until after the meeting or at the December meeting. Still, the risk is that the Fed turns more dovish than in September when it did not do much.”

Deutsche Bank

“Our US economists write that they don’t anticipate any material announcements at this meeting, but do think that Chair Powell could provide a status update on the FOMC’s views about strengthening QE forward guidance and extending the duration of purchases.”