Treasuries gained on rising concern that economic growth overseas faces headwinds, prompting traders to push back their forecasts for an interest-rate increase from the Federal Reserve. The USA dollar slipped following the minutes of the Fed’s meeting. That means that a large portion of the newly investing public has never gone through an interest rate cycle that has involved a series of interest rate hikes where the public feels like the Federal Reserve is trying to put a governor on the economy.
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Closer to home, he said he does not expect markets to respond in a “strange or unpredictable” way when the Fed does begin to raise rates, and guessing about the market’s likely reaction is not what is driving the Fed’s policy decisions. “”They want to wait and see how things develop”, said Sung Won Sohn, an economics professor at the * a href=”http://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Martin&ln=School” class=”learn” rel=”.
Name SearchWatch Service’>Martin Smith School of Business at California State University, Channel Islands. “Nonetheless, regardless of the timing, higher US policy rates could still result in significant market volatility and financial stability consequences that go well beyond US borders”, according to the International Monetary Fund.
According to the minutes, Fed policymakers were also concerned about “the potential erosion of the committee’s credibility” if inflation were to persist below the central bank’s 2% target, and also about their limited ability to use policy to counter negative shocks to inflation and economic activity.
Some analysts said the recent Greece and China developments lowered the chances of the Fed raising rates in September. The Fed’s next meeting is July 28-29, but economists had already ruled out the possibility of a rate increase then. For the rest of us, maybe it is a bit puzzling to see this ahead of the expected interest rate hike cycle. “This argument that it could be earlier and shallower or later and steeper, why do you worry about that so much – I think that’s premised on the idea that overall it’s about time to start normalizing”, Evans said.
In Asia, China’s securities regulator banned shareholders with stakes of more than 5 percent from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets. “At this point, we just can’t do it”.
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In her prepared remarks, George made no specific reference to Greece’s current debt crisis or China’s tumbling stock market, but said “global economic concerns can pose unpredictable risks to our economy”. In addition, she will deliver the Fed’s mid-year outlook on the economy during two days of testimony next week before House and Senate committees.
