FOMC: closely following any revision to Fed’s projections - UOB Group

Analysts at UOB Group explained that they expect the Fed to announce its balance sheet reduction (BSR) program in Sep FOMC (and to be implemented in Oct 2017). 

Key Quotes:

"The Congress deal (on 6 Sep) to combine emergency aid for Hurricane Harvey victims with a temporary increase in the US debt ceiling limit and finance government spending till 15 Dec 2017 should be good enough for the Fed to proceed on with BSR rather than to risk delaying the decision to Dec (which could be met with another Congressional battle)."

"And even as we still factor in another 25bps Fed rate hike in Dec FOMC, we do note that the “postponed Congressional battle” may have an impact on our Dec projection."

"We will be closely following any revision to Fed’s projections especially their inflation outlook which may materially alter rate hike trajectory expectations."