Mizuho on FOMC Rate Decision - FJElite
The October Fed meeting was approximately as expected: The Fed delivered a skip, keeping in tact expectations that more hikes are still coming. Our view remains that the Fed will still hike 2 more times with a risk of front-loading due to the Fed’s vague October skip and our less sanguine view on the path of inflation between now and year-end.
The policy statement was little changed. There were 2 hawkish dissents.
- We expected Cleveland's Hammack to dissent, as our read is that she is the most hawkish of the Fed voters this year.
- Governor Cook is a less obvious dissenter. We pegged her as a moderate hawk. That may have been an incorrect read. Alternatively, her views may have grown relatively more hawkish since her last public commentary. There is also the possibility that she was trying to send a message about the Fed’s independence from the political process. We will be awaiting her future commentary.
- The Fed does not operate in a vacuum. Many commentators have speculated that the Fed would skip the October meeting due to its proximity to the midterm elections. We have no opinion as to whether that was the case, but if it were the case, that is not an appropriate move from the point of view of monetary policy or central bank independence.
