The markets are already bracing for the final Fed policy meeting of the year, knowing any chance in the language of their policy statement could have market moving implications. Bobbi Rebell reports.
Every word will matter when the Fed gets down to business at its last meeting of the year Tuesday ... and Fed watchers are betting there will be at least one key change: BNP Paribas' Bricklin Dwyer: SOUNDBITE: BRICKLIN DWYER, SENIOR ECONOMIST, NORTH AMERICA, BNP PARIBAS (ENGLISH) SAYING: "What we think will happen this week is that they do shift from thinking that rates will rise in a considerable time to being patient with monetary policy or patient upon that time. To most of us, that wouldn't mean a whole heck of a lot but in fed speak what that means is we are inching closer to the first rate hike so for us we think they do change that language from considerable time to patient and we think that means that we are about 6 months away from the first rate hike. " But once the Fed does start to hike rates - the pace of it is also a question - faster perhaps if the economy continues to hit on all cylinders as it has recently - or at a more measured pace if there are unanticipated hiccups. SOUNDBITE: BRICKLIN DWYER, SENIOR ECONOMIST, NORTH AMERICA, BNP PARIBAS (ENGLISH) SAYING: "They will approach it very gradually they will try to communicate that as well. we think that they are essentially going to try to initiate a series of rate hikes that is much more flat than what we've seen in the past or subdued or patient - to borrow their phrase that they are likely to implement in the pace of rate hikes so for us that means something akin to 25 basis points every other meeting or once a quarter." One possible wrinkle to watch for- the world beyond U.S. borders. SOUNDBITE: JOHN LONSKI: CHIEF FINANCIAL MARKETS ECONOMIST, MOODY'S (ENGLISH) SAYING: "I would watch the meeting closely to see whether or not any reference is made towards regarding weaker economic conditions outside the United States. that would be of importance and again they may make some mention of the possibility of commodity price deflation spreading beyond oil and if that were to occur that would definitely affect policy." It's also not just about the policy statement- When the meeting ends on Wednesday- Chair Janet Yellen holds a press conference. Her unscripted answers have moved the markets in the past.