We get the rate decision in a few hours from the FOMC, and the dollar has reversed yesterday’s selling, which pushed equities up late in the day.
Since January, I have said we will not have a change in rates this year and nothing I see will change that prediction. There is too little economic grow and certainly no inflation — excluding asset bubbles created by the Fed’s policy — in the US.
The better option, but one I don’t think the Fed can take is to begin selling off some the Treasuries it holds on its balance sheet to the tune of 4+ trillion in holdings.
The reason I say it can’t do that is because the lowering the price on the debt would impair the global banks, who have huge debt positions on their books as an asset propping up their balance sheets.
Come 2pm here in the eastern time zone in the US, the statement will say no rise, but the Fed sees the possibility of a Dec rate rise, or better yet, it will hold a press conference after the October meeting to have the ability to raise then. Not to raise then, but to have the market think that there is a chance of a raise.
The one outlier is raising rates by 0.1% as a symbol of recovery. It’s a fool’s move, but it keeps the confidence game going.