What really matters about Fed policy and why investors shouldn't overlook the 'Big Long' dynamic

The fact that this morning many comments focus on the so-called increased probability of a rate hike this December completely misses the point, writes Raphael Pitoun, CIO of Seilern Investment Management.

What really counts for the wider global economy including consumption, investment and housing, and not least the equity market, is the direction of the Fed fund rate beyond the next meeting and where it will finish its course at the end of the tightening cycle. And on that front, the dynamics are clear and actually accelerating. The long-term end of the 'dot plot chart' has again drifted down and is now sitting below 3% for the first time. Secular factors which are well documented now and which are not related to the cycle, such as demographics and decreasing productivity, have been m...