US domestic demand strength is likely to bolster confidence in the outlook for those FOMC members who think a healthy consumer and falling unemployment justify a modest rise in interest rates by year-end.
However, others are likely to argue that the drag from net trade and slower inventory accumulation justify the decision to defer rate hikes at the September meeting. These members are likely to continue to highlight downside risks to activity and inflation.
"A rate hike is not expected at the October meeting and look for the FOMC statement to retain the language that "global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term." These factors will delay an initial rate hike until March", says Barclays.