- Markets overwhelmingly expect the FOMC to hold benchmark rates unchanged at its Wednesday decision, following September's quarter-point rate increase.
- Headline CPI was 3.7% in September, driven largely by energy prices, and core CPI was 2.6%, still well above the Fed's 2% mandate.
- Warsh has said he is highly reluctant to give forward guidance, which leaves investors looking for signals from his press remarks.
- Deutsche Bank's Brett Ryan expects Warsh to signal that further tightening will likely be needed over time.
- Evercore ISI's Krishna Guha calls the Fed's current strategy a material execution risk, citing the lack of detail on how it weighs its dual mandate.
- Mortgage rates above 7% keep the housing market under pressure, while the labor market has settled into a low-fire, low-hire pattern.
Quotes
“Markets expect the Fed to hold benchmark rates steady when it releases its decision Wednesday.”
“But there is material execution risk.”
“is likely to signal that recent inflation data reinforce expectations from the September meeting that further tightening will likely be needed over time”