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The multi-faceted Fed

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Fed day. A change in policy is not, perhaps, terribly likely. A change in the nuance of the statement is perhaps more plausible. However the divide between markets and economists over the future path of the Fed remains significant.
  • Simplistic interpretation of the Fed is problematic because the institution has become more democratic (so more competing opinions), because different economic ideologies advocate different policies, and because there are multiple policy options.
  • French and German consumer confidence is due. Although noise from auto sector problems or the migration debate may have some impact, we believe domestic credit supports domestic economic activity and the domestic consumer in the Euro area.
  • Australian inflation came in weaker than expected (the headline unchanged on the year, against expectations for a rise). Administered prices were part of this, but there does seem to be a more competitive domestic economy containing prices.