WASHINGTON, D.C. — Today’s Fed meeting was fitting for the lazy days of summer—no rate change and only minor tweaks to the policy statement reflecting the latest data.
Chair Powell will be conducting press conferences after all eight FOMC meetings starting next year, but for now these interim meetings continue to be non-events. The few changes in language today leaned hawkish, a sign the next rate increase isn’t far off.
Looking ahead to September, the case for a hike is strong, reports the RBC. Said Josh Nye, senior economist at RBC, GDP growth accelerated sharply in Q2, and while we doubt the add from exports will last, firmer domestic demand looks set to persist near term. Core PCE inflation is holding close to the Fed’s 2 percent objective and core CPI is running slightly firmer.”
Nye added, “The labor market remains strong, and while it would be a stretch to say wages are taking off, pay growth has picked up this year. Tariffs remain a risk to the outlook, though the Fed’s scant mention of trade issues today speaks to their limited impact thus far. Some caution might be warranted if tensions ratchet up significantly, but for now a strong domestic backdrop and sizeable fiscal boost argue for less accommodative monetary policy. We expect two more rate increases over the second half of the year, and look for 100 basis points of hikes in 2019 as well.”
SOURCE: RBC press release