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Analysts at Nomura do not expect many new developments at the November FOMC meeting this week and instead, expect the minutes of the meeting to be more insightful.

Key Quotes

“Over the intermeeting period since September, the economy has remained on solid footing. In the post-meeting statement, the FOMC will likely state that economic activity continued to grow steadily rather than “rising at a strong rate.” As non-residential fixed investment growth slowed in Q3 following the acceleration in previous quarters, there is some risk of the FOMC downgrading its assessment of business investment growth.”

“Recently, financial conditions have tightened somewhat, driven by sharp declines in equity prices and a slight widening of credit spreads. However, we view it as unlikely for the FOMC to react to this development at the moment.”

“Against the backdrop of the recent convergence of the effective federal funds rate (EFFR) to the interest paid on reserves (IOR), the FOMC may discuss the possibility of introducing another widening of the gap between the IOR and the upper limit of the fed funds target range.”

“Such a discussion could be reflected in the minutes of the meeting along with any additional comments regarding longer-run issues such as the Fed’s implementation framework or alternative monetary policy strategies.”