The Fed pauses the rate hike

The Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) has left interest rates unchanged in the range of 2 to 2.25% and warned that "business investment has moderated the rapid expansion recorded since the beginning "the year".

The decision was made unanimously and in accordance with market expectations and, as with every announcement, she warned that the gradual rise in rates would continue as the economy expanded. permits.

In the seventh monetary announcement of the year, the Fed committee asserted that "economic activity (US) has remained in solid expansion".

"Employment earnings have remained high in recent months and the unemployment rate has fallen, which has helped household spending, which has continued to rise sharply," he said.

However, they stressed the moderation of fixed capital investment by entrepreneurs, which, according to Oxford Economics analysts, confirms the tendency of committee members to suspend the upward trend in the rise in rate. However, the consultants caution against a hawkish tone that, in monetary terms, indicates a restriction, except for 2019.

Since December 2015, the US central bank has promoted eight rate hikes. Three of them, this year, led by Jerome Powell as president of the Fed.

Increase in December

Futures quotations indicate after the announcement that there is a 93% chance of a December rate increase.

This expectation, to which they put a price, would confirm the signals collected in the September dot charts, where an internal survey of FOMC members showed that a further rate hike could take place before the end of the year. # 39; year. Since this has not happened this time, the expectations are postponed to December.

But they do not coincide with the message garnered in the same point chart exercise, which in September signaled three more increases in 2019. The futures market only bets for two rises next year.

With them, the strategists of Capital Economics agree, predicting two further increases in the first half of 2019.

"We expect, however, that economic activity will slow below its potential level, which could force the Fed to suspend the rise," they wrote in a note to customers.

According to the FOMC calendar, there is a monetary meeting and an announcement during the year, scheduled for December 18 and 19, during which they will unveil an update of the "dot patterns" with economic expectations. and the monetary trend of committee members.