Markets Post Nov FOMC outlook: No Fed rate hike in 2016?

Currently, markets are digesting the release of FOMC statement. See what Major Banks think after yesterday’s FOMC meeting. Should we expect no Fed rate hike in 2016? 

3 November, AtoZForex The Federal Open Market Committee (FOMC) has left the interest rates unchanged across the US yesterday. Now, the global markets are uncertain whether the Federal Reserve (Fed) will raise the funds rate in December. Below we present to you what three major banks expect from the Fed in the near future.

RBS: Markets to want Fed to push the rate hike

The Bank believes that the markets’ pricing of the probability of the December rate hike has significantly increased after the FOMC statement. Bank refers to the data from Bloomberg, as the chances for the rate hike in December went up almost 10% after the release of FOMC statement.

Moreover, the Royal Bank of Scotland expects the markets to want the Fed to push the interest rates higher before the end of 2016. Yet, the question is whether the financial and economic conditions will guarantee the safe rate hike, according to bank’s view.

Danske bank: No Fed rate hike in 2016?

Danske Bank stresses the fact that the forecasts in regards to the rate hike have come true, as the Bank did not believe the Fed would raise the rates so close to the US elections date.

Even though the FOMC statement said the chance for the rate hike ‘has continued to strengthen’, it further stated that it was decided ‘for the time being, to wait for some further evidence of continued progress toward its objectives’. Following on this, Danske Bank states that there are some important data to be released in the near-future, such as tomorrow’s job report. This could possibly change the Fed’s mind regarding the interest rate raise matter.

The Bank further states that before it believed that no rate hike will happen till the year-end. Currently, it still backs this view with slight changes, as the US data has been coming in better. However, no certain opinion was provided from Danske bank.

BNP Paribas: 25bp rate hike in December

This Paris-headquartered bank sees the odds of the 25bp December rate hike at 75 percent. The Bank further notes the FOMC’s progress of acknowledging the inflation and the market measures of inflation compensation shifts.

Furthermore, BNP Paribas states that FOMC still sees its economic near-term risks as “roughly balanced”, where it also continues to thoroughly observe inflation indicators and financial advancement.

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