A cura di Adrian Hilton, Responsabile tassi e valute di Columbia Threadneedle Investments
We don’t expect fireworks from the Fed at Wednesday’s interest rate decision. A 25bp hike at the September meeting, followed by an additional tightening in December, remains our expectation for 2018.
The policy statement is likely to confirm a gradual path of hikes, consistent with Chairman Powell’s testimony to Congress two weeks ago. Last Friday’s release of the Q2 GDP data suggests that the consumption boost from this year’s fiscal stimulus was meaningful – albeit somewhat lagged – and that will probably convince the FOMC that the expansion is robust enough to keep on hiking.
But so far we’ve seen nothing to suggest that tax reform has materially increased levels of investment and the potential growth rates. That means that, for the time being, the Fed is unlikely to revise up its estimate of the level of neutral rates. On that basis, policy could become restrictive around the middle of next year.
So far, the Fed has seemed relaxed about the potential hit to growth from an escalation of trade tensions; we’ll be scrutinising the statement for hints that they are becoming more concerned.