The one thing there is little doubt over is that the Fed will not announce an interest rate rise at this meeting.
“While the decision is yet to be officially made there is little doubt about the probable outcome of the meeting, with the market consensus being that interest rates will remain unchanged while the Fed Fund rate is expected to remain at 0.5%,” said Mihir Kapadia, CEO at Sun Global Investments.
“In fact, the market is not fully pricing in a 25bp price increase in the Federal Funds rate until February of next year. Our own calculations suggest that the market is not expecting a rate increase until May of next year, however these expectations are subject to the whims of the market and stronger than expected economic data released during 2016 could very well increase expectations of Fed action this year,’’ he added.
It is increasingly the rhetoric around Yellen and co’s decisions and future actions which investors have to grapple with rather than the decision itself, and that is no easy task.
