Fed Policy Outlook: the still benign price data will keep the Fed sidelined
Fed Policy Outlook: the still benign price data will keep the Fed sidelined through Q3, and potentially through the rest of the year, especially if the FOMC decides to begin unwinding the balance sheet. Indeed, policymakers have already indicated a preference to delay further rate hikes as they implement QT, and analysts and many other Fedwatchers look for an announcement of such at the next policy meeting on September 19, 20. Fed funds futures have inched higher on the data, and implied rates have subsequently dipped now suggest only about a 1 in 3 chance for another increase in the funds rate this year. Several Committee members have supported one more tightening in 2017, consistent with the dot plot estimates. It will be instructive to hear if that's still the case as the Fed is running out of time for inflation to confirm a sustained pick up toward the 2% target before the December 12, 13 FOMC.