USD: The Fed Sticks To Its Guns For Now; We Stick To Dec Hike Call; Bullish USD - CIBC

CIBC FX Strategy Research comments on today's FOMC September policy decision.

"The Fed didn't hike rates, and did announce the start of its balance sheet reduction program. Everybody actually knew both of those outcomes, so the focus on what was said about rate hikes down the road.

"In particular, the median forecast sticks to the view that there is one more hike this year, and three more next year, but the target for 2019 and beyond is slightly flatter, with a "long run" target ot 2.75% (vs the prior 3%). Four FOMC members dont see a hike this year, but one is looking for two, with the rest looking for one hike.  Core PCE forecasts were a bit lower for this year, with real GDP a bit stronger, but median forecasts beyond this year are little changed for both growth and inflation.

Bullish for the US$ vs. other majors, bearish for the bond market, as the Fed sticks to its guns for now. We're maintaining our call for a quarter point hike in December, and two further hikes next year." CIBC argues.

Source: CIBC Economics - CIBC Capital Markets