La Française: Pre-Fed commentary

La Française: Pre-Fed commentary

27 juli 2021

Fed
Federal Reserve Washington.png

By François Rimeu, Senior Strategist at La Française AM

What to expect from the July 28th Federal Open Market Committee (FOMC) meeting.

  • We do not expect any substantial change from the July FOMC policy statement.
  • On the economic front, we expect the FED to maintain a cautious optimistic tone considering the spread of the delta variant.
  • Employment has strengthened but FED members will need more data before being comfortable tightening financial conditions.
  • We believe Chair Powell will indicate tapering discussions will continue during the summer.  
  • We do not expect major details on the tapering process. The FED may announce a change at Jackson Hole conference (August 26-28) or during the September meeting (21-22) before a formal announcement in December.
  • We expect Chair Powell to reaffirm that price increases are mainly transitory, but he might emphasize that the Committee could act if higher-than expected inflation was to persist for an extended period.

In summary, we expect the FED to maintain a prudent approach, which will have no significant impact on financial markets.

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