The ‪‎US Fed‬ acknowledged reduced risks and improved labour market, but no hikes yet. But the US economic conditions overall are stable enough to anticipate a single rate hike either in September or December meeting

1. The FOMC Meeting Takeaways
 As largely expected, the FOMC left the rates unchanged yet again in
yesterday’s meeting. In fact, the FOMC sounded a tad more hawkish
than in the June meeting, citing:
- Diminished ”near-term” risks,
- Economic activity “expanding at moderate pace”, and
- “Strong” job gains and “some increase in labour utilisation”
 Strong labour data in June improved the sentiments as US added 287k
payrolls (expected: +175k), and the labour-force participation rose by
0.1% to 62.7%
 We expect the positive trend in US household consumption to continue
- Amidst tighter labour market, average hourly earnings have trended
above 2.5% (YoY) over the last three months
 We highlighted in our last paper that global economic developments
have primarily been responsible for keeping the FOMC rate hikes at bay.
Though the conditions seem to have improved since then (especially the
China and BREXIT-related concerns have been contained), the
fundamental cause of concerns haven’t been tackled as yet
 The FOMC acknowledged that inflation has trended below the long-
term target as a result of “decline in energy prices and in prices of non-
energy imports”
- Export of deflationary waves (think excess capacity) worldwide has
been the key reason for the fall in prices of non-energy imports
- Oil prices have begun to decline once again, with the increase in crude
oil production and oil & gas rig count in the US. This, along with the
already significant inventory build-up of gasoline and continued
increase in supply from OPEC, are once again making the oil prices head
southbound
 We expect business spending/ investments to remain lacklustre until the
upcoming US elections
- Uncertainties regarding global demand outlook and the recent
slowdown in global trade will also continue to weigh on business
sentiments
To sum up, the US economic conditions overall are stable enough to
anticipate a single rate hike either in September or December meeting