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Federal Reserve Set to Raise Federal Funds Rate; Trump Faces Tax Bill Setback After Alabama Election

Published December 13, 2017
  • The US dollar remains steady ahead of today’s FOMC statement and release of the Federal Funds Rate; the Federal Reserve is widely expected to raise the Fed funds target range by a quarter point at 2:00 PM EST today.
  • The raise in interest rates from 1.00%-1.25% to 1.25%-1.50% has been largely priced into the strength of the US dollar; markets will be more focused on Janet Yellen’s last press conference at 2:30 PM EST where she will discuss forecasts for economic growth and inflation and projections for interest rate hikes in 2018.
  • Month-on-month growth in the US Consumer Price Index (change in price of goods and services purchased by consumers, a major indicator for inflation) came in at 0.4% as expected; the core iteration of this data (price changes excluding food and energy) missed the mark and came in 0.1% versus expectations of 0.2% growth.
  • US President Donald Trump is scheduled to speak today at the Treasury Department to address ongoing progress on US tax reform; Trump and Republican tax bill efforts suffered a major setback last night after Democrat Doug Jones defeated Republican Roy Moore in the Alabama special-election for US Senate.
  • Republicans in both the Senate and the House are still working to reconcile the differences in their respective tax bills before they present it to President Trump for his signature; Trump and the Republicans cannot afford to lose more than three votes in the Senate and will be keen to pass legislation before new Doug Jones is sworn in to US Senate in a few weeks’ time.
  • Oil prices are moving higher this morning after the American Petroleum Institute revealed a large draw-down in US oil stockpiles. The commodity stands to gain more if the US Energy Information Administration’s official weekly oil supplies report confirms this increasing demand.