Fed likely to raise 2015 growth projection – Commerzbank

By FXStreet FXStreet (Córdoba) – This week all eyes remain on the Fed which will announce its interest decision on Thursday rather than on the usual Wednesday. According to Dr Christoph Balz, analyst at Commerzbank, the meeting promises to be interesting given that it features the usual quarterly press conference and the Fed will update its economic projections from June which will also include median figures for the first time.

Key quotes

“The Fed is above all likely to raise its 2015 growth projection by half a percentage point. At present, the US central bank is looking for 1.8-2.0% year-on-year growth in the fourth quarter”.

“Its unemployment forecast has already been overtaken by reality. The rate dropped to 5.1% in August, which is lower than the Fed’s expectation for the fourth quarter of 2015 (5.2-5.3%). Furthermore, in view of the strong and stable downtrend in the rate of unemployment, it appears unrealistic to assume that the rate will stick to 5.0% in the next two years. This would essentially argue for the Fed to expect a higher underlying inflation rate”.

“However, with inflation recently surprising to the downside and given the dampening effect of the renewed slump in oil prices, it will probably leave …read more

Source:: FX Street