Fed may still opt to raise rates sooner than anticipated - Rabobank

Piotr Matys, EM FX Strategist at Rabobank, notes that the US stocks rallied the most in two months on the back of dovish comments from Fed’s Lael Brainard on Monday.

Key Quotes

“Brainard said that “the case of to tighten policy preemptively is less compelling” due to persistently low inflation and prevailing external risks to the US economy.

The implied probability that the Fed may raise rates next week fell to 22% from 30% and to 27% for the November’s meeting. That said, a cautious approach may still prevail following the rout caused by growing market concerns that central banks are reluctant to inject another dose of stimulus and that the Fed may still opt to raise rates sooner than anticipated.”