Ahead of the December 16th – 17th FOMC Meeting

Summary

At the Crossroads of Soft Inflation Expectations and a Strengthened Labor Market. Sustainable labor market gains and stronger fundamentals behind GDP growth tipoff a hawkish FOMC stance. Softening inflation expectations reinforce the dovish FOMC members’ push for explicit 2 percent “symmetric” inflation target. Downward pressure from energy prices on inflation expectations will leave the Fed cautious not to signal unintended tightening of financial conditions

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