November FOMC meeting statement highlights

The following is November FOMC meeting statement highlights and key points. See how shifted Fed rate hike expectations affect the USD.

02 November, AtoZForex – As expected the Committee decided to maintain the target range for the federal funds rate at 0.25 to 0.5%. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation. However, December Fed rate hike expectations have shifted.

November FOMC meeting statement highlights

Since the Committee met in September, labor market has continued to strengthen and growth of the US economic activity has picked up from the modest pace seen in the H1 of the year. Unemployment rate is little changed in recent months.

To determine the next Fed rate hike, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2% inflation. This assessment will take into accoun measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected progress toward its inflation goal.

The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.

Voting against keeping fed funds rate unchanged were: Esther L. George and Loretta J. Mester, each of whom preferred at this meeting to raise the target range for the interest rate to 0.5 to 0.75%.

November FOMC meeting statement key points

In other wards, November FOMC meeting was a non-event. The Fed did not even try to prepare the markets for an upcoming Fed rate hike in December. Yet, markets appear to ignore the fact that the Committees view remains neutral as it was in September and price December Fed rate hike at approximately 70%.

November FOMC meeting EURUSD post November FOMC meeting (click to zoom in)

Next, US Presidential elections and US NonFarm Payrolls with employment data on Friday will be under the spotlights.

In both cases, we can expect the USD to trade under pressure heading into the US Presidential elections on 8th of November and therefore look for opportunities to short the USD.

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