Sure, the RBA froze interest rates on Tuesday, but there's plenty of pain to come 
Interest rates: the ugly dilemma facing Europe’s central banks – and why it’s a mistake to cut too soon 
Inflation: raising interest rates was never the right medicine 
Why central banks are too powerful and have created our inflation crisis 
The RBA has kept interest rates on hold. Here's why it'll be cautious from here on 
If central banks don't start cutting them soon, it could actually increase inflation 
Recent comments and speeches from FOMC members suggest that the doves are 'ready to fly' as well, as they seem to support - or at least accept - the first Fed hike since 2006 at the next FOMC meeting in December. During the weekend John Williams (neutral but has been slightly dovish, voter 2015) said that the decision to keep the Fed funds rate unchanged in October was 'a close call'. Also he argued that his own preferred measure of inflation - the so-called trimmed mean PCE - is currently 1.7% y/y and thus not far from the 2% target and that he sees inflation moving back to 2% 'within the next two years'. According to Williams the US is close to full employment and employment growth above '60,000-100,000' new jobs would be enough to keep pace with the growing labour force. He also argued that the FOMC can make the normalisation process more gradual if it starts now.
Yesterday Charles Evans (dovish, voter 2015) stated in an interview with MNI that the first hike 'has gotten closer' and that he is not 'predisposed' against a hike in December. Although he would still rather wait, he is not 'primed to dissent against a December hike'. Evans wants the FOMC to signal a gradual rate path.
Also yesterday, Eric Rosengren (dovish, voter 2016) said that a hike in December is 'appropriate unless the economy slows' as he is 'reasonably confident inflation will rise to 2%' and that the US will soon have full employment. He said that Friday's job report 'held very good news' but that 'a more gradual path of normalisation may be necessary to ensure reaching the 2% inflation target'.
The more hawkish statements from the doves support the view among analysts and investors that a hike in December is very likely. Hence, focus has moved to the period after the first hike. The new battleground for the FOMC members will be how the Fed should proceed once it has begun the new tightening cycle. As economists argued in First Fed hike in December due to very strong job report, 6 November, economists look for four additional hikes in 2016, i.e. in total five hikes from now until year-end 2016. This corresponds to a hike every other meeting and is in line with the median Fed projection from the September meeting. This implies that the Fed funds target range will be 1.25%-1.50% at the end of next year.
"We base this on the increasing wage inflation, which means that the underlying inflation pressure in the US is increasing. The doves will probably argue that a slower tightening cycle is needed as the US and the global economy have been through a very severe crisis and so that the Fed can monitor the impact of the tightening on the real economy. If the Fed hikes in December as expected, focus will be on the updated projections for the Feds funds rate", says Danske Bank.
