Nomura is expecting the first Fed hike in December and explaining about it: the FOMC will not raise rates this week during September FOMC:
- "Even without a decision to raise short-term interest rates, markets will have a lot to digest. We will get a new round of forecasts from FOMC participants. The economic forecasts for this year are likely to change in response to data that have already been released. We are not expecting big changes to the economic forecasts for 2016 and beyond. More importantly, we will also get another set of interest rate forecasts. We are expecting significant declines in the FOMC’s expected path of interest rates."
- "At a minimum, we expect the Committee’s forecast for 2015 to coalesce on one hike this year. We are expecting the FOMC to raise rates for the first time in December. We do not expect the Committee to endorse a more rapid pace of interest rate adjustment after liftoff. Consequently, the delay in liftoff should imply a lower path of rates over the whole forecast horizon. We also think that the downward adjustment of the rate path is consistent with the recent tightening of financial conditions. We think that those changes in financial conditions will primarily be reflected in the FOMC participants’ paths of interest rates rather than their paths for growth and inflation."
- "Finally, we will hear from Chair Yellen in her post-FOMC press conference. We think Yellen will stress that the FOMC is getting closer to raising rates and that the Committee expects to raise rates this year. We expect her to acknowledge that downside risks have increased and those had played a role in the Committee’s decision. We expect her to reiterate that the Committee’s future decisions will continue to be sensitive to how the outlook for the economy and inflation evolves and that the pace of interest rate adjustment, once it begins, is likely to be slow and data dependent."
