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According to analysts at Standard Chartered, the question of when the current business cycle will turn is front and centre for investors and FOMC members alike.

Key Quotes

“We expect the September FOMC deliberations to focus heavily on this topic, and offer the following clues about members’ views and therefore the appropriate path of policy:

  • We expect some ‘dots’ to shift up in September, which would be modestly hawkish.  
  • We expect the 2021 forecast to reflect a gentle deceleration in real growth to 1.8-1.9%, a stable unemployment rate around 3.5% and no significant inflation overshoot, which would be consistent with a relatively flat Philips curve.
  • We think the estimate of the non-accelerating inflation rate of unemployment (NAIRU), which is expressed as the long-run unemployment projection, will not change.
  • Description of monetary policy as “accommodative” could be dropped.”