The Federal Reserve will release its October FOMC monetary policy statement today at 2:15 PM ET, following the central bank’s latest policy meeting.
There will be no press conference nor updates to the Fed’s economic forecasts today.
Deutsche Bank chief economist Peter Hooper writes in a note to clients that “the Fed will have no inclination or incentive to make any notable changes in its policy statement this week,” given that economic data since the September meeting has been mixed.
In addition, Hooper says the Fed “will have reason to want to maintain a low profile with the Presidential election less than two weeks away.”
JPMorgan strategist Hajime Kitano wants to see whether the FOMC statement alludes to easing of global financial tensions. In a note, he writes that we haven’t heard that from the Fed since April:
Kitano writes, “[Market participants] should first focus on the Fed’s assessment in the FOMC statement scheduled for release on October 24…based on our earlier observations, we also see scope for a sustained and substantial market rise.”
Citi economist Bob DiClemente brings up the prospect of even more aggressive Fed easing than the details of the open-ended QE3 bond purchases that have already been announced in a note to clients:
Despite the more direct link between the policy bias to ease and labour market disappointments, it is far from clear what constitutes substantial improvement in labour markets. Chairman Bernanke in the past has talked about a sustained period of strong growth in employment and the latest statement more or less implied that recent increases in payrolls averaging near 150,000 per month is “slow.”
Importantly, there are scant indications from hiring surveys or other labour leads that hiring is poised to better this pace. Along with job growth, a languishing employment-to-population ratio could serve as a focus of policy in conjunction with labour force growth and the jobless rate itself.
The minutes of the September FOMC meeting indicated “many participants” believed that forward guidance could be improved by the use of “numerical thresholds” for labour markets and inflation. Yet one of the more obvious benchmarks — the unemployment rate — is beyond the Fed’s powers in key respects and its recent behaviour has diverged unpredictably from previous relationships to the broader economy as the rate has plummeted despite sluggish growth.
Ultimately, DiClemente concludes that “Fed officials may be cautious about setting labour market targets in the current environment.”
The FOMC statement will be released at 2:15 PM ET. We will have the statement LIVE on Money Game >