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Analysts at Westpac argued that overall, the FOMC is intent on continuing with its gradual normalisation of policy, believing that the underlying strength of the US economy will win out over global uncertainties (a large portion of which is the result of President Trump’s political agenda).  

Key Quotes:

“However, every step towards neutral (and potentially beyond) will be data dependent.”

“And, as the Committee intend to continue communicating the policy stance evolution to the market ahead of time, the chance of a material overshoot for policy are limited.”

“Against the FOMC’s forecast six rate hikes to end-2020, we instead believe that only three more will be delivered to June 2019.”

“As we have highlighted, though the labour market remains strong, consumers are financially constrained by subdued wage growth and a low savings rate, hence consumption’s conribution to growth is unlikely to be sustained.’

“Business investment is yet to show a capacity to offset this loss of momentum and now faces considerable risks. This is not to say that a recession is coming; merely that annual GDP growth will slow to trend by late-2019.”