China Gold Network reported on September 20 that the Federal Reserve will start a two-day meeting on Tuesday. On Wednesday, the Federal Reserve will release policy statements and new economic forecasts. Although the market generally believes that the Fed will keep interest rates unchanged this month, some people still call on the Fed to raise interest rates.
Canadian Imperial Commercial Bank Capital Market chief analyst Avery Shenfeld said that due to a series of weak economic data recently, the Fed does not believe that the Fed will raise interest rates, and will not even issue a clear warning for hikes.
Avery Shenfeld said, "The economic development in the first half of the year was weak, and the US non-farm employment report had a brilliant month or two, while the recent non-farm data performed weakly."
The average US economic growth in the first half of the year was only 1%. After the recent data was released, expectations of a stronger economy in the second half of the year have also faded. For example, two highly-watched American Supply Management Association (ISM) released the manufacturing and service industry index, which showed that both the US manufacturing and service industry had contracted in August. In addition, retail sales were weak, employment growth was slow, and industrial output was weak.
Montreal Bank Chief Economist Douglas Porter said, "The conditions for hikes do not exist now, and the August data performance is disappointing."
According to US federal funds rate futures pricing, the probability of hikes in September is 15%.
Economists said they do not rule out the possibility of unexpected rate hikes this week, especially in light of what Fed Chairman Yellen mentioned earlier, the conditions for the Fed's interest rate hikes have increased in recent months.
Barclays and BNP Paribas economists team believe the Fed will raise interest rates, and the probability of Oxford Economics hikes in September is 40%. "Although the market suggests that the possibility of the Fed's interest rate hike in September has been almost completely ruled out, we think the situation still implies an upcoming interest rate hike." Gregory Daco, head of the US macroeconomics at Oxford Economy, said that recent labor market data and inflation data prove that the Fed may raise interest rates next week.
Gregory Daco, notes that the 12-month moving average of employment data is still within the 200,000 range. According to the Atlanta Federal Reserve Bank’s wage tracking, the three-month moving average of wage growth has risen to 3.3% in August, compared with 2.4% in the same period in 2014. Core consumer prices are also rising and better than expected.
Chief American economist Paul Ashworth of Capital Investment Macro said that the unexpected rate hike is just not Yellen's usual style.
While most Fed observers believe the Fed will raise interest rates in December, some have called for a broader reflection on the gradual sketch of laughter. Kevin Cummins, senior American economist at
RBS, said, "When will the next rate hike be? It is still not very clear. The most likely result is that they will not do anything now."
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