Federal Reserve interest rate decision previews from 10 banks

The following are brief expectations for the FOMC November 1st policy statement as compiled from the related notes of 10 sell-side strategy and research desks.

Overall, the consensus expects the FOMC to stay on hold before hiking again in December and thinks that this FOMC meeting is likely to be a non-event with limited impact on USD .

Barclays Research: We expect the FOMC to leave its target range for the federal funds rate unchanged at 1.00%-1.25% at the November meeting as it continues to evaluate to what degree recent disinflation is temporary or persistent. The committee, in our view, is likely to look favorably at the underlying components of the Q3 GDP report which showed a positive contribution to growth from both net exports and inventories; we see trends in these categories as reflecting the synchronized global growth backdrop. Distortions to domestic data from the hurricanes that made landfall in August and September are likely to be ignored.

Credit Agricole Research: We expect the FOMC meeting to be relatively uneventful. The fed funds rate should remain unchanged and the FOMC also does not anticipate any changes to its scheduled balance sheet reduction unless there is a material change in the economic outlook. The committee will continue debating the inflation outlook and causes of persistent inflation target undershoot. While the doves have been arguing for patience the majority appears keen to raise rates one more time this year at the December meeting. Going beyond December the outlook is clouded by the uncertainty about the FOMC composition which will be partially addressed on Thursday when the President is expected to nominate the next Fed Chair.

SEB Research: The Fed will maintain the target range for the Fed funds rate at 1.00-1.25%. No additional information about the reduction of the balance sheet is expected (i.e., a Fed estimate of the long-term size of the balance sheet). Since there are no expectations for a change in policy, the meeting will be overshadowed by the nomination for Fed Chair. President Donald Trump is expected to announce a nominee before November 3. We expect the Fed to hike in December and forecast three further rate increases in 2018 (June, September and December).

ING Research: In light of strong growth and low inflation there would seem little need for any substantive changes and even a hint that policy should be adjusted in 'coming months' may not have much of an impact on the USD rate curve since 23bp of a 25bp rate hike is already priced for the December 13th meeting...We think a December rate hike looks probable. We are a little more cautious in 2018, predicting two 25bp hikes versus the Fed's forecast of three.

BofAML Research: We don't expect many fireworks from the upcoming FOMC meeting on November 1. Since we will only receive the statement and not an updated Summary of Economic Projections or press conference, there are few opportunities for the FOMC to send a signal to the markets about the future direction of policy..A hawkish addition to the statement would be if the FOMC puts in an explicit reference that a hike is likely at the upcoming meeting.

Danske Research: We do not expect the Fed to send any new signals at tonight's FOMC meeting (one of the small meetings without updated projections and a press conference) and still think the Fed is set to hike again in December

Scotiabank Research: We anticipate no major changes to the FOMC's statement tone as policymakers seek to maintain expectations for a December hike.

Lloyds Research: The FOMC conclude their two-day meeting and are widely expected to leave policy unchanged. However, the market will be looking for clues in the statement as to whether they will increase rates again by 25bps in December. The market expectations are currently running around 65-70%. We expect them to note general satisfaction with economic conditions, despite concerns that inflation is still running below target.

CIBC Research: The Fed won't make its rate hike yet, but expect it to further lay the groundwork for a move in December by alluding to the strong Q3 GDP print and tentative signs of a stabilization in core inflation.

Nomura Research: We expect no significant changes or surprises in the FOMC statement on 1 November. Despite the recent and continued weakness in inflation, it is unlikely that the FOMC will announce a material change in its inflation outlook. Instead, we think the Committee would prefer to wait for an addition inflation print ahead of the December meeting before changing its inflation assessment.

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