Fed statement was definitely more hawkish – Natixis

Natixis research desk believes the Fed statement released yesterday was definitely more hawkish even though the central bank did not make any explicit reference to December.

Key quotes

The statement mentions that the case for a rate hike “has continued to strengthen” and the Fed is only waiting for “some further evidence of continued progress toward its objectives.”

Comments on inflation were marginally more hawkish: -“Inflation has increased somewhat” versus “continued to run below the, Committee’s 2% objective” previously, Market based inflation expectation “have moved up”, Inflation is no longer expected to “remain low in the near term”.

In short, today’s statement, even though it lacks an explicit reference to December, is definitely more hawkish and reinforces our expectation that the Fed will hike at the next FOMC meeting.

Full statement Fed decision: Nov 2, 2016