One economist predicts the Fed in January will shift from targeting inflation of 2% over the 'medium term' to doing so over an average of the business cycle.
The Federal Reserve is going to announce its latest interest-rate decision on Wednesday, and how the central bank describes its thinking is likely to drive market direction, unless there is a major development on the U.S.-China trade front.
Lena Komileva, chief economist at G-Plus Economics, in the call of the day forecasts the Fed will shift from targeting inflation of 2% over the “medium term” to doing so over an average of the business cycle. Inflation in the current recovery, as measured by the personal consumption expenditure price index, has averaged just 1.5%.
That said, Komileva does say the market is overpricing the risk of a rate cut next year, even with a more dovish Fed. “The potential for a bearish re-steepening of the yield curve remains high, especially as equity markets are buoyant, the U.S. consumer remains resilient and the global industrial down-cycle plateaus. This appears to assume a very pessimistic outlook for U.S. political risk and U.S.-China trading relations heading into the 2020 U.S. presidential elections,” she says.
Tesla TSLA, +2.07% will make 500,000 cars a year at its new German factory, according to a report. Ahead of an investor presentation, Home Depot HD, -1.77% forecast comparable-store sales growth between 3.5% and 4% next year.The U.S. Army is looking to fund construction of rare earths metals processing facilities, Reuters reported, citing a government document it saw.
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