The minutes to the September 20 meeting of the Federal Open Market were released today, and in the press commentary I found at least one bold prediction, in The Wall Street Journal:
Tom Gallagher, a Fed analyst at brokerage firm ISI Group, predicts that after the Fed's next meeting, on Oct. 24 and 25, it will release a statement citing risks to both weaker growth and higher inflation, rather than inflation alone as its statement did last month, while saying inflation risks predominate. He said markets would have to decide what that meant for interest rates.
Actually, I think they may have decided. From MarketWatch...
"Those people who were hoping the Fed would lower rates this year...well, a damper has been put on those hopes," said Andrew Richman, managing director of personal asset management at SunTrust.
and from the Financial Times...
The Fed funds futures market now expects the first rate cut to come in the second quarter of 2007 – not the first. David Ader, bond strategist at RBS Greenwich Capital, said “these minutes are consistent with an on-hold Fed, no ease for a long while”.
and from Reuters...
"This indicates to people who were thinking that maybe the Fed might be cutting interest rates sometime this year or early next year, that's not likely to happen," said Nigel Gault, director of U.S. economic research for Global Insight in New York.
Bill Cheney, chief economist at John Hancock Financial Services, believes there is a good chance that the Fed will stay on the sidelines for the rest of this year and perhaps into part of next year.
Sounds like a consensus, but I did find one suggestion that the FOMC might move sooner rather than later -- up! From USAToday:
"The linchpin of the Fed forecast is economic growth in the second half of the year," says Stephen Stanley of RBS Greenwich Capital Markets. If growth slows and inflation moderates, the Fed can stay on hold, he says. If growth is higher than expected, it might have to raise rates.
You might see that in the probabilities for the December FOMC meeting estimated from prices for options on federal funds futures -- if you stare really, really hard:
Still, it does appear that the expectation of a near-term rate cut is fading fast.