Fed Likely to Label Markets Volatility as ‘Temporary’ in Statement Next Week

Don’t expect the Federal Reserve to dwell on the current spat of stock market volatility in its January statement, released next week. ‘We’re likely to see the Fed say that their medium-term outlook is relatively unchanged and recent events [in the markets] have been temporary and driven by mostly foreign factors,’ said Stewart Warther, a U.S. equity and derivative strategist at BNP Paribas. Plunging oil prices and worries about China’s economy have sent stocks on a wild ride so far this year, with the broad S&P 500 losing 7 percent since the start of the year. Oil prices lost 17 percent since the start of the year and 42 percent over the past 12 months. The Fed releases its January statement next Wednesday. The markets are pricing in a 12 percent chance of a hike to short-term interest rates, which were raised for the first time in nearly a decade in Dec. 2015. TheStreet’s Scott Gamm has details from Wall Street.