US Economics Weekly: Employment preview & Fed roadmap

Research evidence excerpt

US Economics Weekly: Employment preview & Fed roadmap

US Economics Weekly UBS Research

Economic Comment: mini rates road map

This week the Federal Open Market Committee voted 9-3 to leave the target range for We expect similar uncertainty to

the federal funds rate unchanged. As we wrote headed into the July FOMC meeting, we surround the September FOMC

assessed that the policy decision was Chairman Warsh’s to make, because several voting meeting as what we were writing

members were probably comfortable staying on hold and a few voting members were headed into the July FOMC meeting.

anxious to hike. Likely carrying Governor Powell and Vice Jefferson’s votes with him, We expect that again, the decision

that left Chairman Warsh's decision as the deciding factor. That was also an important will likely be Chairman Warsh's to

source of uncertainty. He is new and his policy framework and reaction function remain make.

unclear. We expect roughly that set-up to be repeated headed into the September

FOMC meeting too.

We also think that Chairman Warsh's press conference comments this week suggest the We think the data to come will

data to come will be an important input into the September decision. Events in the matter.

Middle East likely matter too, not necessarily the risk of energy prices but also risk of the

broader supply disruptions and resulting upstream price pressures. We project the

FOMC leaves the funds rate unchanged for the remainder of the year, however that is

highly uncertain, and there are a few things we think will bear on the outcome. We have

an event calendar on the next page.

Setting aside the hard to handicap oil market, the next big marker for the outlook for the

federal funds rate is the July employment report released Friday August 7. The data this