US Federal Reserve chair Janet Yellen: markets are indicating about a 75 per cent chance of a United States rate increase next month, the first in nearly a decade. “It won’t necessarily be a smooth trajectory, but I don’t see any reason why it should pick up”, Citi analyst David Wilson said.
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“Gold prices are hunkering down for the imminent US Fed Funds rate liftoff”, Vyanne Lai, an economist at National Australia Bank in Melbourne, said by e-mail. In 1994, U.S. economic growth was 2.6 per cent, while in 1999, the USA was growing at a rate of 4.8 per cent, and 4.4 per cent in 2004.
She says “most” policymakers want a gradual rise…
The USA labour market has been steadily improving over the past 18 months.
The USA added 271,000 jobs in October, the most so far this year, and unemployment fell to five per cent, the lowest since 2008, Labour Department data showed.
He also mentioned the idea of a higher inflation target, though he noted concerns about central-bank credibility and the fact that the Fed and other central banks have struggled to boost inflation even to their current targets.
So, how will this parlour game play out? The dollar index last stood at 99.710 .DXY . Bullard does not have a vote in deciding economic policy.
The history shows that the big global central banks often are not synchronized but they do appear to move in the same general direction over the medium term when a Fed rate hike eventually leads to the Europeans’ and the Brits’ following suit. “We just have to turn this aircraft carrier around, get out of this zombie-like economy which is being fed on an elixir of low interest rates and get to a process of normalization”.
Against the yen, the dollar held steady near 122.91 yen JPY= , having backed off from a three-month high of 123.77 yen set last Wednesday. Gold prices were pressured by Dudley’s comments as well as the firm USA dollar, said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.
Therefore, expect the pace of hikes, which will kick off in December, to be slow – very slow.
Earlier Saturday, Mr. Williams told attendees at the Berkeley conference that going forward, he thinks the Fed should consider the possible merits of maintaining a large balance sheet or lowering interest rates into negative territory in light of a persistently low interest-rate environment. If the Fed did raise its interest rate in December, he expected the Aussie to fall to around US70c.
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The journey back to normal interest rates will most likely begin with a small step next month.
