Fed’s Threshold Beckons
UBS economics expects the US unemployment rate to fall to 6.5% today, making contact with the Fed’s key threshold for the first time since the current forward guidance framework was introduced. That’s not to suggest that a rate hike is imminent
– rather the framework will likely be overhauled to recommit the Fed to keeping rates unchanged for some time yet. New York Fed President Dudley is already leaning in that direction, noting yesterday the Fed would “have to look at a broad set of labor market conditions rather than one single indicator.” Indeed the Bank of England has been through this same process already.
Read the full report: UBS