FOMC meeting is a low-key event – BBH

According to analysts at BBH, the FOMC meeting is a low-key event as there are already four hikes into the cycle and the Fed has not managed to hike rates outside of a meeting in which there is a press conference and updated economic projections.  

Key Quotes

“It is a shame because that cuts in half the number of "live" meetings, and denies it greater flexibility.  There is not going to be a change of rates today, and there cannot be much of a commitment to hike in December.  If it were a done deal, as the vernacular would have it, then the Fed would hike rates now.”  

“We suspect Fed officials have been pleasantly surprised by the continued strength of the economy, and could, in its economic assessment, recognize it.  We would not push this point too hard though on the grounds that final domestic sales were rose by an uninspiring 1.8%.”  

“The Fed has finished its first month of allowing its balance sheet to shrink.  It may adjust the technical section to reflect this.  Otherwise, we expect the FOMC statement to be little changed.  We note that this will be Governor Quarles first meeting.  The market will wait for December's meeting to try to tease out his dot on the plot.  For the record, assuming no chance of a rate hike today, and making some allowances for year-end behavior, we estimate that fair value for the December Fed fund futures contract would imply a 1.295% yield.  It has been fairly steady at 1.275%.”