#ChoiceBroking #FOMC Update

1. SEBI Certified – Research Analyst www.choiceindia.com
The US Federal Reserve kept its interest rates unchanged to 0.5 percent for sixth consecutive time this year. US Federal
Reserve Chair Janet Yellen statedthat rate hikes isnotpossible at thisstagedue tononfarm payrolls climbingby 182,000
jobs on average so far this year, although the most recent report showed a cooling to 151,000 job gains along with
moderating wage increases. Other figures have shown declines in August retail sales and industrial production, as well
asdropsinsentimentatservicecompaniesandmanufacturers.
Finally, Fed in Action17th December 2015
The US Federal Reserve Chair Janet Yellen stated that although the unemployment rate is little changed in recent
months, job gains have been solid, on average. Household spending has been growing strongly but business fixed
investment has remained lenient. Inflation is still running below the Federal Reserve 2 percent goal. After picking up
earlier intheyear,annual gainsin theheadlinepersonal consumptionexpendituresprice indexslowedto 0.8percent in
July. Core inflation, which excludes food and fuel costs, is firmer though still undershooting at 1.6 percent. According to
median estimates, long term interest rates between 2.9 percent to 3 percent in June. Further, the central bankers cut
the median growth projection for 2016 to 1.8 percent from previous forecast of 2 percent. Inflation is expected at 1.3
percentinthefourthquarter,downfromaearlierforecastof1.4percentinJune.
SEBI Registered – Research Analyst www.choicebroking.in * Please Refer Disclaimer on Website
Outlook: Going forward, it is estimated that the Federal Reserve is likely to hike its interest rates in one of its
upcomingtwo meetings.From the above chart it is seen that, Nov’16 poll hintstowards a rise of 25 basispoints (bps)
which is still unlikely but Dec’16 meeting shows a high probability of around 48 percent that the Federal Reserve will
hike its interest rates by at least 25-50 bps. Based on yesterday’s statement, it is estimated that central bank still
believes in wait and watch stance and will hike the interest rates only if they see confidence in the economy, though
the Fed see a balances scenario in the current economy. It is anticipated that Fed will have one hike in interest rates
in2016,two in2017andthreein2018and2019respectively.
FOMC UPDATE
22nd September 2016
(1.5)
2.9
0.8
4.6
2.7
1.9
0.5
0.1
1.9
1.1
3.0
3.8
(0.9)
4.6
4.3
2.1
0.6
3.9
2.0
1.4
0.8
1.1
(2.0)
(1.0)
0.0
1.0
2.0
3.0
4.0
5.0
US Final GDP (%)
78%
21%
1%
2nd Nov'16 Meeting Rate Hike Probability (%)
25-50 bps 50-75 bps 75-100 bps
41%
48%
10%
1%
14th Dec'16 Meeting Rate Hike Probability (%)
25-50 bps 50-75 bps 75-100 bps 100-125 bps
Source: Bloomberg
Source: CME FedWatch Tool
221
265
84
251
273
228
277
150 149
295
280
271
168
245
208
123
11
292
255
151
0
50
100
150
200
250
300
350
US Non Farm Employment Change ('000)

2. SEBI Certified – Research Analyst www.choiceindia.com
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SEBI Certified – Research Analyst www.choicebroking.in
Research Team
Mr. Sumeet Bagadia Associate Director
Anish Vyas Sr. Research Associate
Kkunal Parar Sr. Research Associate
Amit Pathania Research Associate
Kapil Shah Research Associate
Rohan Patil Research Associate
Vikas Chaudhri Research Associate
Trirashmi Ghoderao Research Advisor
Neeraj Yadav Research Advisor
17th December 2015
At Last, Fed in Action
FOMC UPDATE
22nd September 2016
Anish Vyas
Digitally signed by Anish Vyas
DN: cn=Anish Vyas, o=Choice Merchandise Broking
Pvt. Ltd, ou=Sr. Research Associate,
email=anish.vyas@choiceindia.com, c=IN
Date: 2016.09.22 09:22:38 +05'30'