SocGen Says Fed is Going to Hold Rates Unchanged

“Lucy’s going to pull the football out from under Charlie Brown again. How many times do we have to see this?” Larry McDonald, head of U.S. macro strategy at Societe Generale, said Wednesday.

McDonald points to the Fed’s history of pushing back rate hike expectations in June and again in September as evidence that a similar situation will play out.

Key challenges in considering a rate rise include a stronger U.S. dollar, falling commodities prices and trouble in emerging markets, McDonald said. He believes that when the time comes to assess monetary policy, the same problems that plagued the market in August will return.

“That’s impacted the Fed’s policy path, the path has been vetoed by economic risk outside the United States and that’s probably going to play out again,” he said. “That brings back credit risk, then we get a leg down in the market, then once again the Fed gets put in a box.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza