Goldman Sachs analysts expect the Fed to leave the federal funds rate unchanged at this week’s meeting and say market reaction will depend heavily on how Fed chair KEVIN WARSH frames the decision and the path forward. They warn that a hold without clear guidance on the economic outlook or the Fed’s reaction function could destabilize the currently stable long-end US Treasury curve and the contained inflation risk premium. Money markets price a 31.5% chance of a hike this week, though the market

Goldman Sachs analysts expect the Fed to leave the federal funds rate unchanged at this week’s meeting and say market reaction will depend heavily on how Fed chair KEVIN WARSH frames the decision and the path forward. They warn that a hold without clear guidance on the economic outlook or the Fed’s reaction function could destabilize the currently stable long-end US Treasury curve and the contained inflation risk premium. Money markets price a 31.5% chance of a hike this week, though the market consensus remains for no change.