FOMC mixed acknowledgments - Rabobank

FXStreet (Guatemala) - Analysts at Rabobank noted that the FOMC did acknowledge the disappointing Employment Report for September by saying that the pace of job gains slowed and that the unemployment rate held steady.

Key Quotes:

"However, they repeated that labor market indicators (and they added ‘on balance’) show that underutilization of labor resources has diminished since early this year. This is in line with our argument that labor market slack is already close to the Fed’s finish line, despite the slowdown in employment growth in September.

The FOMC said that household spending and business fixed investment have been increasing at solid rates (instead of ‘moderately’ in the September statement), underlining the strength of domestic demand.

With respect to inflation, the Fed acknowledged that market-based measures of inflation expectations moved lower, although only ‘slightly’ this time.

As in September, Jeffrey Lacker (Richmond Fed) voted against the decision, because he preferred 25 bps hike at this meeting.

The initial market reaction was a rise in US treasury yields and a drop in the EUR/USD exchange rate."