The following are Goldman Sachs’ expectations for this week’s policy meetings by RBA, BoJ and the FOMC minutes from the September meeting. Dates below correspond to the location of events:
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Tuesday, October 7.
Japan | MP Decision:
We expect the bank will maintain its quantitative and qualitative easing program. Our focus is on the bank’s assessment of the state of the economy given disappointing August production and consumer spending-related data as well as the slowdown in core CPI.
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Australia | MP Decision:
We expect rates on hold (cash rate at 2.50%, in line with consensus). We are not expecting a major shift in view – even if it has become clear over the past week that the RBA will support the likely introduction of some new form of macro prudential regulation by year-end. In fact it is the labour force report on Thursday which will be of most interest to us this week, on the back of the unprecedented +120k employment growth reported for August. Although there is a risk that the recent methodological changes to the employment survey have resulted in a permanent upward shift in employment levels, on balance, we think it reasonable to expect a meaningful degree of payback in the month of September. In any event, we expect the labour force report to continue to signal that there is a significant degree of spare capacity in the Australian labour market.
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Wednesday, October 8.
United States | Minutes from MP Decision.
We expect that both the “considerable time” forward guidance and the assessment of “significant underutilization” in the labor market were likely topics of debate at the September meeting. At the event, both were retained in the FOMC statement. In addition, in light of the apparent about-face in the Committee’s assessment of inflation—made more hawkish at the July meeting and downgraded at the September meeting—we will look for any further detail on participants’ views. Further extensive detail on the exit strategy appears unlikely, in light of the release of updated exit strategy principles that were very much in-line with the discussion in the June and July minutes.
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The above is from Goldman sachs via eFX, with thanks to both – more from eFX from here
