Analyst: Fed Meeting Focus Shifts to How Warsh Will Signal

Odaily News: If the Federal Reserve keeps interest rates unchanged this week, Fed Chair Warsh will face a familiar challenge: he must convince investors that the Fed is committed to curbing inflation while also explaining why officials have chosen not to raise rates. This is much the same as the situation in July—at that time, investors were not surprised by the decision to keep rates unchanged, but were dissatisfied with Warsh's reluctance to hint that borrowing costs may need to be raised further in the future.

Following the September rate hike, the market again expects policymakers to keep rates unchanged this week. As a result, market expectations have shifted to December, with it now widely believed that the Fed is highly likely to raise rates for the second time this year in December. Stephen Stanley, chief economist at Santander U.S. Capital Markets, said: "I don't expect rates to change, but I do think they will raise rates again in December. The tricky part of the communication at this meeting is that Warsh needs to explain why no action was taken in October while also explaining why a rate hike in December is still possible." (Jinshi)