There’s only one item on the Agenda ” Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks”.
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Most major banks have stuck firmly to the view that the euro will fall toward parity with the dollar in the months ahead as the Federal Reserve begins to lift interest rates while the ECB takes the opposite course.
“I would welcome the return of that because to me that’s normal monetary policy”.
With a rising real lending rate, investors will favor the dollar to gold, creating an attractive trade opportunity, buying the dollar, and shorting gold. Now the growth rate is about 2.7 per cent – much lower than the previous two occasions, and almost on a par with 1994.
“We had a very large rally last week, and it’s not surprising to see the market correct after that”, said Stephen Massocca, Chief Investment Officer of Wedbush Equity Management LLC in San Francisco.
This is the heart of our property market and they say that it is losing steam, that prices will soon come down because the market can not be sustained at such high levels.
At the same time, the tremors from the sharp devaluation of the Chinese yuan have largely disappeared, without causing lasting damage to the global financial system. Since then, the data has remained strong – including the reported addition of 271,000 jobs in October – and Fed officials have sounded increasingly confident.
So, how will this parlour game play out?
Manufacturing today is also weaker than it has been in the past three instances.
And, as per usual, the decision to raise rates, Bullard emphasized, will be “data dependent”, meaning it will be based on the latest economic data available.
Simply put, the USA economy is not in the pink of health and raising rates at this time has risks the Fed will be careful to watch.
Second, the USA is the only developed economy whose central bank is tightening monetary policy now.
There was overwhelming consensus on one aspect: there would be a gradual trajectory of any future rate increases. Negative rates led to a strong spike higher in the price of gold, and essentially was the catalyst for the metal’s decade long bull market.
Rob Kaplan, the Fed’s newest policymaker, declined to use his first public appearance as president of the Dallas Fed to comment directly on the timing of a rate hike, but expressed confidence that inflation will rise back to the Fed’s goal over the medium term. The minutes were released on Wednesday, November 18 and confirmed the Fed’s strong signal for a December rate hike.
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The results show that primary dealers believe the neutral rate-the borrowing cost, adjusted for inflation, that keeps the economy at full employment with stable prices-is now around zero, and will rise more or less in a straight line to 1.5 percent by the end of 2018.
