China International Capital Co said the Fed held in October and retains a firm
anti-inflation stance but can be patient. Some previously hawkish officials have
moved to a wait-and-see posture, reducing the urgency for consecutive hikes.
Since the September increase US financial conditions have tightened marginally
and the inflation risk premium has eased, giving the Fed scope to observe policy
effects. The report expects one more hike in December followed by a pause, and
characterizes the current tightening as more likely moderate and gradual than
aggressive. A Fed official announced plans from next year to reduce the
frequency of rate votes and to devote some meetings to long-term strategy,
continuing efforts to reform the Fed’s policy framework. Near-term risk of
surprise additional tightening has declined, though the medium-term stance
remains tilted toward tightness.
