Sage Investment Club

The consensus has shifted to a 25bp interest rate hike at the January 31/February 1 Federal Open Market Committee (FOMC) meeting.

Earlier today I had this reflecting the ratchet downward:

Citi (client note via CNBC, this report is not fresh, posting as a catch-up):

  • “We are changing our call for the February FOMC meeting from a 50 [basis point] hike to a 25bp hike, although we think markets should continue to place some probability on a larger-sized hike”
  • “Softer PPI will join with slower consumer price and wage inflation to most likely push the Fed toward a 25bp increment”

Mohamed El Erian is advocating for the FOMC to hike by 50:

  • I would go personally
    for 50 and that’s because I think
    inflation is going to get sticky in
    mid-year around four percent
  • I’d
    rather get the tightening out of
    the way now than when the economy weakens
  • It’s a personal
    judgment I’d go for 50

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