BNP Paribas Markets 360 expects the Fed to hold rates, while not ruling out a
surprise hike. Its baseline is one hike in December, but it sees a substantial
risk the FOMC will harden inflation wording in the statement, effectively
putting a September rate move back on the table. Wording on price stability will
be the focal point; the statement is likely to indicate a readiness to act if
needed. BNP Paribas warns absence of such language would not preclude a
September hike, nor would inclusion guarantee one. At the press conference, the
Fed speaker is expected to follow June’s pattern — brief opening remarks,
concise answers and very limited forward guidance — and, if the statement is
largely unchanged from June, opening remarks should mirror his congressional
testimony on inflation, labor-market data, the outlook and the commitment to
restore price stability.
