Awaiting US president Trump's pick of the new Fed Reserve Chief - UOB

 Analysts at UOB Group noted the FOMC yesterday but  explained the importance of the latest FOMC decision is clearly overshadowed by the impending announcement by US president Trump for his pick of the new Fed Reserve Chief

Key Quotes:

"The Fed kept its view on inflation outlook that “survey-based measures of longerterm inflation expectations are little changed, on balance” and that “Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely” (unchanged from Sep FOMC). And on the Fed balance sheet reduction program, the Fed just simply noted that the “balance sheet normalization program initiated in October 2017 is proceeding”. 

Reflecting the strong conviction for expecting a FOMC Dec rate hike, the probability put up by Bloomberg’s WIRP puts it at high 92.3% (as of 1 Nov) after briefly dropping to 66.8% on 31 Oct (down from 82.8% on 30 Oct) while the CME Group’s Fed Watch puts the probability of a Dec hike at near certainty, at 98% (as of 1 Nov). 

That said, the importance of the latest FOMC decision is clearly overshadowed by the impending announcement by US president Trump for his pick of the new Fed Reserve Chief. Wall Street Journal reported (2 Nov) that that the White House has notified Fed Governor Jerome Powell that Trump intends to nominate him as the next Fed Chair."