Although financial markets have confidently priced-in a May rate hike, low core inflation implies that the case for risking growth by pushing rates higher is far from clear. If, as we expect, the economy were to show signs of a slowing by May, the Fed will want to give it the benefit of the doubt by standing pat at that point.
More Quotes from Avery Shenfeld:
The Bank of Canada remains on the warpath against inflation in an economy where recent job and production gains are, in its view, too much of a good thing.Avery Shenfeld
Today's statement ups the odds that the Bank of Canada will be back again with a 25 bp (basis point) 'Christmas present' in December.
Avery Shenfeld
We expect the combination of a U. S. growth moderation and the lagged impacts of a strong Canadian dollar on factory employment to do a lot of the work in engineering that cooling in Canadian hiring, leaving the Bank of Canada with only another 50 basis points in rate hikes.
Avery Shenfeld
If markets felt the Bank of Canada was going to press on with rate hikes after the Fed stopped, that could fuel an overheated Canadian dollar, providing too much of a braking force on exports.
Avery Shenfeld
It's pretty clear after (stronger than expected) third quarter GDP numbers they are going to hike in December, and the odds of a hike in January are rising, but they could still take a pause in January if core inflation doesn't heat up,
Avery Shenfeld
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