Fed will “sit out” the November meeting and leave rates unchanged – Nomura

Nomura Global Markets Research team believes the Fed will ‘”sit out” the November meeting and leave rates unchanged.

Key quotes

At the conclusion of the September FOMC meeting, the Committee left the federal funds rate target unchanged at 0.25-0.50%. However, the minutes to the meeting and fed official remarks since the meeting suggest that it was a “close call.”

Incoming data (e.g., steady growth and inflation numbers) will likely keep the Committee on track to raise rate this year. However, we think that it will “sit out” the November meeting and leave rates unchanged, as it is only a few days before the election. We do not expect major changes to its policy statement. However, there is some risk that the committee adjusts its language to send a stronger signal that a rate hike is likely in December.