The Federal Open Market Committee (FOMC) will meet on Nov. 1-2, 2016, and investors should keep an eye out for any implications Fed Chair Janet Yellen will say at the release. The market already has its mind set on an unchanged Fed Funds rate in November. For the 30-Day Fed Fund futures expiring in November 2016, the futures prices indicate a 90.7 percent probability that rates will remain between 0.25 percent and 0.50 percent. However, there’s no saying what the Fed will do.
More market participants are looking for a Fed Funds rate hike in December 2016. Fed Funds futures prices indicate a 71.4 percent probability of the FOMC raising rates by 25 bps and a 7.1 percent probability of a 50 bps hike. Again, it’s the same old story, we don’t know that the Fed will do. The FOMC is looking to raise rates some time before 2016 ends, but it could renege its plans and decide to leave rates unchanged.
The FOMC is frightened to do anything in regards to monetary policy because anything it says or does will substantially impact the economy and markets. The Fed seems like it’s just hoping and praying the economy will start expanding and hit its inflation target. One thing is certain, leaving rates too low for too long will negatively impact the economy.
