La Française AM: Pre-FED commentary

La Française AM: Pre-FED commentary


By François Rimeu, Head of Multi Asset & Senior Strategist

FOMC meeting, nothing new but stay tuned for Jackson Hole

The FOMC will be meet this coming July 28th and 29th.  Here is what we expect:

  • Dovish forward guidance, reaffirming that rates will be held low for a long period of time.
  • The Fed will confirm the continued expansion of their balance sheet at the current pace and conserve flexibility.
  • They will maintain their support to credit markets.
  • They will not increase their accommodative stance: Uncertainty remains high, but the economy has recovered faster than most economic forecasts (Retail sales, employment, etc.).
  • They will reaffirm their opposition to negative rates.
  • They will not implement yield-curve control. The topic is still under discussion, but we believe Fed members will prefer to wait for more macro-economic clarity before acting.
  • They will communicate that their strategic review on inflation is still ongoing but provide no further information. The Jackson Hole conference (August 28) might be a good place to introduce some of the conclusions.

All in all, it should be a non-event for financial markets.