The consensus has shifted to a 25bp interest rate hike at the January 31/February 1 Federal Open Market Committee (FOMC) meeting.
Earlier today I had this reflecting the ratchet downward:
Citi (client note via CNBC, this report is not fresh, posting as a catch-up):
- “We are changing our call for the February FOMC meeting from a 50 [basis point] hike to a 25bp hike, although we think markets should continue to place some probability on a larger-sized hike”
- “Softer PPI will join with slower consumer price and wage inflation to most likely push the Fed toward a 25bp increment”
Mohamed El Erian is advocating for the FOMC to hike by 50:
- I would go personally for 50 and that's because I think inflation is going to get sticky in mid-year around four percent
- I'd rather get the tightening out of the way now than when the economy weakens
- It's a personal judgment I'd go for 50
