/###POV: PREPPING FOR DECEMBER - Potential......>

FED: /###POV: PREPPING FOR DECEMBER - Potential surprises from this week's FOMC

meeting are very limited, but if any emerge, they could lean slightly dovish.

- While no change is expected Thursday (91.5% chance, per MNI PINCH), attention

will be paid to the statement (in the absence of new projections/Q&A).

- Incoming data have been largely in line with FOMC expectations, with inflation

near 2% and 2018 GDP growth still in line with 3.1% Q4/Q4 projection.

- Statement is therefore likely to reiterate 'roughly balanced' risks to

outlook, with 'further gradual' rate hikes, reinforcing a Dec hike (77% priced).

- Floor vs corridor interest rate system (per MNI sources article Nov 1) and

balance sheet runoff may be discussed, but unlikely in statement.

- As such, meeting minutes out Nov 29 likely to be more scrutinised than usual.

- IOER adjustment looms, but likely to wait until December.

- Dovish Risk: Statement cites equity volatility / trade disputes as downside

risks, and/or highlights softening business investment/housing activity.

- Hawkish Risk: FOMC emphasises strength in recent data (esp wages), omits

mention of areas of weakness, and notes but dismisses market volatility.