Capital Economics: Fed Likely to Hold Rates This Week as Warsh Comments Watched

Capital Economics said it is “almost certain” the U.S. Federal Reserve will keep policy unchanged this week. According to ChainCatcher, the view was cited from a Jin10 report. Stephen Brown, Capital Economics’ chief North America economist, said the market risk centers on potential communication errors or a shift in Kevin Warsh’s stance, adding Warsh’s remarks could be more hawkish than expected. Brown also said that if Warsh is constrained by U.S. President Donald Trump, a dovish tone could raise concerns about the Fed’s independence and push up long-term bond yields. He added that the likelihood is high for two “insurance” rate hikes in December and early next year.