Fed is widely expected to raise interest rate by 75bps again today, to 3.75-4.00%. The main question is whether Chair Jerome Powell would signal that tightening pace is going to slow afterwards.
Currently, there are some expectations that Fed would opt for a smaller hike of 50bps in December, then a 25bps hike in February, and probably another 25bps in March, and pause from there.
However, such hope was somewhat dashed as job data released yesterday showed that the job market could have tightened further. Job openings surged to 10.7m in September, rather than a fall to 9.8m. Ratio of openings to unemployed persons also climbed from 1.7 to 1.9. ISM manufacturing employment also improved.
Overall, there could be some negative market reactions if Powell doesn’t deliver any firm message of a pivot.
Here are some suggested readings on Fed:
- FOMC Meeting Preview: Fed Expected to Hike 75bps, But is the Pivot Imminent?
- Will the Fed Confirm Hopes of Slower Tightening?
- Fed Preview: Too Early for a Pivot
- Powell and NFP Release Will Crash USD
- November Flashlight for the FOMC Blackout Period: Our Expectations Ahead of the November 2nd FOMC Meeting
