FXStreet (Delhi) – Philip Marey, Senior US Strategist at Rabobank do not expect the US Fed to hike rates before December meeting as he believes that the recent developments in August are not likely to have increased the doves’ confidence in the inflation outlook. This makes a September rate hike by the Fed decreasingly likely.
Key Quotes
“The developments in August are not likely to have boosted the Fed’s confidence in the inflation outlook. The slowdown of the Chinese economy, the devaluation of the yuan against the US dollar, and the worldwide decline in commodity prices could further delay the return of US inflation to its 2% target.”
“At the same time, the negative impact of last year’s decline in oil prices and rise of the dollar on US business investment appears to have faded. Domestic growth has become more balanced and continues to have sufficient momentum. Therefore, we do expect the Fed to hike before the end of the year, most likely in December.”
“The second estimate of Q2 US GDP came out at 3.7%, well above the first estimate of 2.3%. The most conspicuous revision was the 3.2% expansion of business investment, instead of a 0.6% contraction in the first estimate.”
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