FOMC: Faced with credibility and over reliance on data problems – ING

By FXStreet FXStreet (Delhi) – Rob Carnell Chief International Economist at ING, notes that the Fed is beginning to face a credibility problem and having tied itself in knots over its previous “forward guidance strategy”, now that the business cycle is older – arguably “late cycle”.

Key Quotes

“Only missing the usual rising wages and inflation that occur in a normal cycle – it is nonetheless seeing growth settling down to a slower pace of closer to 2.0% than the 2.5-3% that it experienced earlier.”

“Perhaps not surprisingly and, not helped by some softness in external markets and earlier dollar strength, the run of data has been mixed to soft, at least compared to expectations. This is problematic because even though the Fed has never tied itself to a date for the liftoff, it does look as if a number of members want to get things started this year, which given that this October meeting is effectively a write-off following the weak labour market report in September, means it is December or nothing until next year.”

“Normally, the Fed would be in a position to give some clues about its intentions. But the FOMC seems riven with dissent – we may see more than the …read more

Source:: FX Street