What to Expect from the FOMC November Meeting
The FOMC is expected to remain on hold
The US Federal Open Market Committee (or FOMC) is expected to leave rates unchanged and maintain the Fed funds range at 1.0% to 1.25% at its November meeting. There are no major changes expected at this meeting, but market participants will be interested in the statement that is released after the meeting. This is a meeting that won’t be followed by a press conference, and major decisions aren’t announced without a press conference. As per the CME Fed Watch Tool, the chances of a rate hike in December stood at 97.8%.
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Key points to consider in the statement
In its November statement, the Fed is likely to maintain the same view on the economy and inflation as in the September statement. The fall in the September jobs number is likely to be acknowledged, but the Fed has already suggested that it is likely to ignore the September data because of the impact of hurricanes.
A strong signal from the Fed would be a mention of the wage growth that was witnessed in recent months. In their recent speeches, Fed speakers have said they are confident that higher levels of employment would lead to wage growth, which would eventually lead to higher inflation. The fixed income (BND) and currency markets (UUP) are likely to experience a spike in volatility (VXX) before the event, but once the statement is out, it’s unlikely that volatility will follow.
It’s an important week with three major central banks scheduled to announce policy decisions. Only the Bank of England event is likely to have not been priced in completely, while the other two central bank events could be completely disregarded by the markets. Equity markets (QQQ) are expected to react to news surrounding tax reforms, while the bond (AGG) and currency markets will likely look at inflation, unemployment, and the US Fed.