WELLS FARGO

The FOMC, Blue Chip or the New Framework: Predicting the Fed Funds Rate.

Easier Monetary Policy Lays the Foundation for Recovery

Prolonged port strikes would eventually be problematic for supply chains, but fattened inventories and a compelling case for presidential intervention suggest to us that worries of imminent disruption are overblown.

Last week was a busy week for international central banks.

The FOMC surprised some market participants today by reducing the target range for the federal funds rate by 50 bps. Concerns about the state of the labor market appear to have been the primary driver of the 50 bps move.

A New Framework to Predict Probability of Monetary Policy Pivots.

In this report, we examine wage, productivity and labor cost trends across the G10 economies to offer insight into how inflationary pressures could evolve and how respective central banks may approach their monetary easing cycles.

August’s inflation data probably cement a 25 bps, rather than a 50 bps, reduction in the federal funds rate at next week’s FOMC meeting in our view. The 0.2% increase in headline CPI was in line with expectations, while the 0.3% increase in core CPI was slightly higher than consensus forecasts.

Weekly Economic & Financial Commentary.