FOMC: Change in the policy stance in July is highly unlikely - Westpac

Research Team at Westpac, suggests that the past few months have proved particularly challenging for the FOMC, with soft nonfarm payrolls employment growth affecting market rate expectations ahead of the July meeting, and the Brexit vote stoking volatility thereafter.

Key Quotes

“A month on, the Brexit vote's immediate impact on equity markets looks to have subsided, with the S&P500 rallying back to trade at fresh highs.

Concerns over the US labour market have also eased, thanks to the upside surprise reported for June, which has helped annual employment gains remain well ahead of growth in the population. The current level of the unemployment rate signals full employment (of available labour resources) is at hand.

A change in the policy stance in July is highly unlikely. But, if job gains persist, look for a move by the FOMC to stoke market rate expectations in coming months before a December hike.”