Fed is ready to hike rates next month – UOB

Researchers at UOB Group assessed the recent payrolls figures and the prospects of further tightening by the Federal Reserve.

Key Quotes

“Friday’s labor report did not really change our or market expectations for the FOMC in December. If there is a key takeaway, it is that the US employment market remains robust and continues to add to its current job creation cycle, hurricane or not”.

“We keep our moderately hawkish outlook for the Fed rate trajectory in 2017 and we expect one more 25bps rate hike in 2017 – in December FOMC – followed by another three 25bps hikes in 2018, bring the US Fed Funds Target Rate (FFTR) to 2.25%”.

“Trump’s choice of Jerome Powell as the next Fed Chair represents continuity in the FOMC and by that extension, continuity to the gradual Fed rate normalization process, so we are comfortable to maintain our present Fed rate trajectory into 2018”.

“The next FOMC meeting and decision on 12/13 December will be accompanied by an updated Summary of Economic Projections and a scheduled press conference by FOMC Chair Yellen, her last post-decision press conference”.