MUFG Research discusses its expectations for today's FOMC policy decision.
"The prospect of less fiscal support will increase pressure on the Fed to deliver more fiscal stimulus to support the economy. The Fed has already committed to keep loose policy in place for much longer into the economic recovery than normal, and we still expect the Fed to step up the pace of QE even if there is less upward pressure on long-term yields as result of dampened fiscal stimulus expectations. It should help to keep the US dollar under downward pressure in the year ahead although downside risks have eased in comparison to if there had been a Blue Wave which would have helped push down real yields more in the US," MUFG notes.
"We do not expect the Fed to take any immediate policy action tonight given its close proximity to the election, but remain hopeful that more stimulus will be delivered in December,' MUFG adds.