As expected, Fed Officials elected not to raise rates at the October meeting. While not completely off the table, a December liftoff looks even less likely than it did after September’s meeting, and, as the Fed continues to put off a hike, the case for early 2016 continues to gain steam.
Dipping in July, the Fed’s mood then rebounded and rose through much of August–and many analysts during this period saw a September liftoff in the cards. Despite this trend, the fact that September’s hawkish sentiment values were lower than they had been in March and April led us to accurately concluded that September was unlikely.
Since then, the trend has been flat with a slight dip in early October and a slight rise in the last couple weeks–a subtle upward tick that has dissipated with recent speeches and today’s tepid release. Today’s press release scored a -0.636 with a residual score of -0.065, indicating that this was a very moderate to just slightly dovish press release.*
Bottom line: while the December rate hike is a lingering possibility, the data suggests that the Fed may hold off on rate hikes until the new year.
The Prattle Team
*We’re keeping in mind that press releases are often more dovish than other types of communications.