At present, this is almost the most suspense-free topic tonight. Without exception, mainstream institutions on Wall Street believe that the Fed will raise interest rates for the first time in nearly a decade. It is widely expected that the Fed will raise interest rates by 25 basis points this time. Under normal circumstances, this rate hike will not have a great impact, but because it is the first time that the Federal Reserve has raised interest rates in recent years, it is of great significance. This is a turning point, which indicates that the Federal Reserve has finally confirmed that the US economy has started to strengthen.
Tim Worstall, a columnist for Forbes, wrote on Friday that analysts and fund managers are almost convinced of the Fed's move to raise interest rates at the end of the year, given that the Fed has released the signal of raising interest rates for several months. If the Fed does not raise interest rates this time, it will cause market panic-the market will doubt the health of the US economy and even the global economy, and it will also discredit the Fed.
☆ Aspect 2: How does the Fed describe the path of raising interest rates?
The principle that the Fed has always believed in is that the specific time of raising interest rates is not as important as the future interest rate trend. Many Fed officials, including Yellen, have repeatedly used the word "gradual" to describe the expected pace of interest rate hikes, but policymakers are obviously very cautious and avoid making any commitment to the pace of interest rate hikes, such as tightening policies at a rigid pace in 2004-2006. We should pay close attention to the Fed's policy statement and Yellen's press conference to find out the policy guidance given by the Fed on what factors will push it to continue raising interest rates in the future.
If the Fed raises the federal funds rate target to 0.25%-0.50% as expected, it will use a series of tools to tighten monetary policy in a financial system with abundant cash flow. The Fed has hinted that it will release an "implementation report" to disclose details when it issues routine policy statements, and officials will pay close attention to ensure that these tools achieve the expected results. According to the minutes of the Fed's policy meeting in June, if it is necessary to make subsequent adjustments to policy instruments or interest rates, the implementation report may be revised without changing the Fed's policy statement.
Therefore, how the Fed describes the path of raising interest rates tonight is undoubtedly the most eye-catching and interesting topic for global investors. There are two different views on the market at present. The more mainstream view is that the Fed will adopt the wording of gradually raising interest rates. However, there are also voices of opposition. For example, Goldman Sachs believes that compared with easing measures such as "raising interest rates once and stopping here", the tightened "overweight enjoyment" approach is more beneficial to risk appetite and the US dollar.
However, according to the practice that the Fed has always been good at playing Tai Chi, this time it is likely to continue to emphasize the "Tai Chi" way of "still relying on data to make decisions" in future interest rate hikes. For the market, it may be time for different people to look at each other.
Some insiders said, "If the Fed is cautious, the market will get a signal that unless the economic fundamentals change very strongly, the Fed's next rate hike may last until the middle of next year." According to a survey of economists conducted by Reuters last Friday, economists believe that the time interval between the first rate hike and the second action of the Federal Reserve will be six months. However, the interest rate futures market is expected to raise interest rates again in March next year.
☆ Aspect 3: Will the Fed revise the wording of the economy and the job market?
Many people pointed out that the Fed may upgrade its language on the labor market. Since the FOMC 10 meeting, the number of new jobs in the labor market has begun to accelerate. 10 this month is the best month for new jobs in the United States in 20 15 years. In June, 5438+065438+ 10, the growth of non-agricultural employment also exceeded expectations. From 65438+ 10 to 165438+ 10, the average number of new non-agricultural employees in the United States reached 255,000. Therefore, the Fed may say in its interest rate resolution statement that "the pace of job creation has accelerated" instead of "the pace of job creation has slowed down".
In addition, Goldman Sachs expects that the Fed will delete its cautious wording on inflation. After the decline of 5438+ 10 in September and June, the PPI of the United States rose by 5438+065438+ 10 in June, casting a "yes" vote on the decision to raise interest rates. Goldman Sachs predicts that in the coming months, as the price of medical services is excluded from the calculation, core personal expenditure (the inflation indicator favored by the Federal Reserve) will also increase. Now, the Fed has begun to normalize its monetary policy, which is very important for the inflation rate to approach the target. In addition, the Fed will say that it has "moderate" confidence in inflation. The Fed may also start to discuss focusing on the "real inflation index" instead of the "inflation pressure indicator".
☆ Aspect 4: Will there be a negative vote in the resolution statement?
At such a key policy node, the degree of consistency within the Committee is also one of the observation points of the market. In the past two meetings, Jeffrey Lacker, president of the Richmond Fed, disagreed. He believes that the Fed should have raised interest rates long ago.
However, if the Fed takes the action of raising interest rates this time, different opinions may come from the party who opposes raising interest rates, that is, the Committee that advocates continuing to implement the easing policy to express their different opinions. Among them, one or more of Chicago Fed President Charles Evans, Federal Reserve Governor brainerd and Tarullo may be popular candidates to vote against it.