The Federal Open Market Committee meeting is today, 11 December 2019
Consensus is for on hold and not too much change, Earlier:
- The FOMC meeting this week - preview (spoiler - the "on-hold" bias is quite strong)
- 3*preview of what to expect from the FOMC this week
- Expect only minor changes in Wednesday's FOMC statement - Barclays
Bank of America / Merrill Lynch flag a low probability outcome, but with substantial implications:
- BoA/ML expect the Federal Reserve's dot plot will show the Fed on hold next
But, there is an chance year the plot will signal a 2020 rate increase. Which would boost the US dollar:
- the analysts point to last week's strong US job data
- "We expect the broader U.S. rates market to have a limited response to the Fed meeting"
- the median 2020 dot (where the FOMC believe the appropriate level for rates will be next year) is likely to be 1.625% (ie showing no move) But if that is not the case and the median dot increases, that "would likely cause some of the easing priced in 2020 to be pared back"
- "we think the hurdle for a significant USD reaction on Wednesday is fairly high", but the risk is "skewed toward a hawkish market reaction"
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Just to say again, BoA/ML think this is an outlier probability.
