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The Federal Reserve remained on hold at its meeting today, but it made it very clear that further monetary tightening likely will occur in coming months, explained Wells Fargo analysts.  

Key Quotes:  

“The Federal Open Market Committee (FOMC) decided at its meeting today to keep its target range for the fed funds rate unchanged at 1.75 percent to 2.00 percent. The eight voting members of the FOMC unanimously supported the decision, which was widely expected among market participants.”

“There was little in the statement that was released at the end of the meeting to disabuse market participants from the expectation that further rate hikes lie ahead. In the forecasts that the FOMC released in June, a majority of FOMC members expressed their expectation that the Fed will raise rates 50 bps by the end of the year. That is our expectation as well.”

“We, and most other analysts, look for the FOMC to hike rates 25 bps at the September 26 meeting. We expect that the FOMC will remain on hold on November 8, but look for another rate hike on December 19 with two more to follow next year. Unless the wheels of the economy come off in coming months, which we do not expect, further Fed rate hikes seem to be more or less in the cards.”