Revise FOMC forecast to December

Genevieve Signoret

Macro Views

We were not surprised by the FOMC’s decision to hold rates unchanged yesterday but were surprised by their frankness and that of Janet Yellen in her press conference with which they’ve admitted that China and market volatility are, today, important drivers of their decision making. We now expect the first interest rate hike to take place not in late October but rather mid-December.

Greece holds general elections on Sunday. Greece’s latest bailout package was approved overwhelmingly by Parliament. But one thing is promising to pass unpopular reforms and another is actually doing so. We don’t know who among the Greek candidates would be most effective at pushing them through. We expect no change in uncertainty levels over the still unresolved euro debt crisis. Just an update as to who’s in charge now and thus how to monitor this saga. For a quick background briefer, we recommend this, free from WSJ: What Does Greece’s Election Mean for Its Bailout?

We expect the Bank of Mexico to hold firm to its monetary policy rate of 3.00% on Monday 21 and until the FOMC hikes rates for the first time.

USA will publish its final estimate of quarter two GDP on Friday 25. We and the consensus anticipate no change from the prior estimate of 3.7%.

Update History:

• 29 September 2015: Wednesday 30:  Mexico: Phase two of round one bidding for shallow oil and gas blocks. 14 players have qualified to bid. In the July 15 initial phase, a mere two blocks were awarded. Mexico’s oil output over the past 10 years has dropped by a million b/d to 2.3 mb/d.