JPMorgan's Feroli on FOMC

He expects the Fed to hold this week, with two hawkish dissents from Hammack and Logan (he sees a risk that Kashkari also dissents). He expects the post-meeting statement will say that “policy will deliver a timely return to price stability.” Feroli On The Press Conf: Chair Warsh will have to explain why the committee hiked after a two-tenths core PCE print in September but is now holding after an expected three-tenths outturn. Disallowing follow-up questions won't resolve the challenge. We believe the various Fed speakers cited earlier provide a reasonable blueprint for what to say: the Committee is biased to hike but wants to take more time to observe how last month's hike has affected the economy. Conveying a bias to hike, something Warsh's role model Greenspan regularly did, is a form of forward guidance, and so it may be difficult for the chair to get this across. However, one can hope there is some on-the-job learning going on. A decision to leave rates unchanged less than a week before the midterm elections that goes unexplained would only encourage thoughts that policy is being driven by considerations other than employment and inflation. ”