US week ahead: Fed rate hike decision and Q2 GDP in focus – Moody’s

Moody’s Investors Services provides a detailed preview of the much-awaited Fed rate hike decision and the US advance Q2 GDP due on the cards later this week.

Key quotes

“Among key data coming will be second-quarter GDP, which our high-frequency GDP model shows is on track to fall 1% at an annualized rate. Before the advance estimate, some additional source data will be released, but it remains likely that GDP fell for a second consecutive quarter.”

“The GDP's weakness so far this year has been attributable to volatile and often mean-reverting components—net trade and inventories—while domestic final sales and gross domestic income have held up noticeably better. Also, GDP is only one of many variables that the National Bureau of Economic Research, the de facto arbiter of U.S. recessions, uses to define a recession as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators."

“Also, this week, the Federal Reserve's Federal Open Market Committee (FOMC) meets, the statement is due at 1800 GMT on Wednesday 26 July at 1800 GMT, with Fed Chair Powell speaking at his news conference at 1830 GMT. “

“On monetary policy, the  Federal Reserve is likely going to increase the target range for the fed funds rate by 75 basis points. There isn’t any data released ahead of the meeting of the Federal Open Market Committee that’s likely to push to the committee to hike by 100 basis points.”