“While we at the Fed continue to scrutinize incoming data, and no final decisions have been made, we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market (and other) central bankers have, for a few time, been telling the Fed to “just do it”. Hearing this idea – that the path of policy rates may be variable, as opposed to fixed/calendar-based (e.g. every other meeting) – from the perspective of both a dovish and hawkish FOMC member tells me the there is a consensus building on the committee and the market may need to rethink its current path forecast a bit.
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“You could think about keeping a permanently higher balance sheet, lowering the term premium and therefore actually raising the natural rate of interest in the economy”, Williams said. The report showed that Fed officials agreed that a rate hike is firmly on the cards for next month and that the pace of rate increases after that will be gradual.
Japanese banks are facing a sharp jump in dollar-funding costs and a blow to their investment returns as the Federal Reserve’s plan to raise interest rates puts paid to an era of cheap dollars. The extraordinary monetary easing since the global financial crisis (zero interest rates and three rounds of quantitative easing, or QE) have done their job in restoring United States growth.
Bullard said the fifth question encompasses the value of the US dollar: “Will the USA dollar continue to gain value against rival currencies?” He noted that since “foreign exchange markets are forward-looking and foresee most or all systematic movements in economies, including predictable policy movements”.
The account said that liftoff from historically low rates might still be delayed by “unanticipated shocks” or disappointing economic data, but such warnings sound increasingly formulaic. Solid cuts in unnecessary spending, and the possibility of increased sales of non-core assets, remain ongoing positives. The Merrill Lynch price target on the stock is a whopping $77. In August the kiwi slumped to a 6-year low of $0.6200 against the dollar in wake of global risk aversion following a tumble in Chinese stock markets, but it has since gained about 6.5 percent.
US interest rate futures on Thursday suggested that traders saw a 72 percent chance of a rate hike next month, compared to 68 percent on Wednesday, according to CME Group’s FedWatch.
Another metric for labor market performance is the level of the Federal Reserve Board staff’s labor market conditions index (LMCI), he said, noting that “its value is well above historical norms, indicating excellent labor market health”.
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“Oil price stabilization likely implies headline inflation will return to two percent in the US”, Bullard predicted.
