GS preview of the FOMC meeting Wednesday 1 August 2018

  • The FOMC is set to leave rates unchanged … Nonetheless, we expect an upbeat statement consistent with a September hike, given solid US growth data and stable financial conditions in the face of rising trade uncertainty.
  • While tariff concerns seem to be on the rise among Fed officials, most seem to believe that these concerns have not yet affected growth or materially changed the economic outlook.
  • Reflecting the upbeat growth picture, we expect the post-meeting statement to retain most of the positive characterizations from the June meeting, referring to growth as "solid," job gains and business investment as "strong," and consumer spending growth as having "picked up."
  • While we expect a nod to the higher June unemployment rate, the tweaks are likely to be relatively minor (to "has stayed low" from "has declined"), particularly because wage growth measures have been stable-to-higher in recent months.
  • … Powell's "for now" comment last week would seem relevant to the "gradual increases" policy rate guidance, we doubt this section of the statement will be modified.

(bolding mine)

Earlier previews: