One or a few months of decent job growth will result in a hike – Scotia bank

FXStreet (Mumbai) – The global economics team at Scotia bank believes the FOMC statement released on Wednesday shows the central bank is just a couple of months away from the rate hike if the job growth stays decent.

Key Quotes

“The statement used to read “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market… Now it reads identically but with the word “some” interjected in the part about ‘further improvement in the labor market.”
“This may be a lowering of the bar on the amount of additional job growth that is necessary before tightening and could be a signal that just another one or a few months of decent job growth will result in a hike.”

“The Fed’s forecasts for 2015 imply that the FOMC will raise the Fed Funds rate (either once or twice — it’s ambiguous) if its forecasts for growth, inflation, and jobs are met.”

However,

“The odds of the latter could well be fairly quickly increased depending on Q2 GDP tomorrow, the tone of revisions, and the tracking for Q3 as the September meeting approaches.”

The global economics team at Scotia bank believes the FOMC statement released on Wednesday shows the central bank is just a couple of months away from the rate hike if the job growth stays decent.

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