Did the Fed signal a Dec Fed rate hike? - Rabobank

Analysts at Rabobank published a review of the latest FOMC statement, noting that Fed did signal a Dec rate hike after changing a key phrase in its statement.

Key Quotes:

“The key phrase in the statement was that ‘the Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives.’

“In comparison to the September statement the most interesting change was the addition of ‘some’, which seems to suggest that we are indeed very close to a hike, December most likely.”

“All’n all, the FOMC has signalled a December hike, but did not use its most powerful signal. In fact, this would not be necessary anyway: futures markets showed that the markets were already well-prepared by the Fed.”

“What’s more, this careful approach provides the FOMC with more flexibility in case the economic outlook deteriorates between now and mid-December.”