Fed policy outlook: Fed funds futures are fully priced for a Dec 14 hike
Fed policy outlook: Fed funds futures are fully priced for a Dec 14 hike. Outside of a meltdown in the financial markets, there's nothing really that should dissuade the FOMC from returning to its normalization path one year after it began. Fed officials, and especially Fed chair Yellen, have been consistent in their views that the case for a tightening has been strengthening. What's key for the markets at this point is the policy path and how many rate increases will be seen in 2017. Policymakers have professed a gradual path, and that's likely to be the case next year. Neither growth nor inflation is likely to surge sufficiently to engender another tightening in Q1. Additinally, the four new FOMC voters, including Evans, Kashkari, Harker and Kaplan are not as hawkish as the current group. Analysts any many other Fedwatchers are looking for two 25 bp hikes, and likely not until the middle of next year at the earliest.