“My personal feeling is that the Fed still wants to raise rates and still expects to, but that there is still considerable uncertainty over the timing”, Mitsui Precious Metals analyst David Jollie said.
Advertisement
The Dow fell nearly 300 points Friday, before rising a little on Monday and then again falling over 250 points Tuesday.
A dovish stance by the Fed was expected, considering the financial market turmoil in major economies and a fall in crude and other commodity prices. But now some investors are dubbing this the “dazed and confused” market (bring on the Matthew McConaughey jokes). “The volatility will continue until we get some clarity from the Fed and China”.
Yields on government bonds inched lower although sentiment towards emerging market assets remained subdued by concerns over global growth.
Sometime in the next six months the Fed will raise rates by a modest amount, says Koesterich.
The FOMC set out two principal decision criteria for a fed funds rate liftoff: “further improvement in labor markets” and achievement of “reasonable confidence” that inflation will rise to the targeted rate of 2 percent in the medium term.
The Federal Open Market Committee’s September decision to keep rates unchanged at 0% to 0.25% was a surprise for most market speculators as many believed a change was likely for September. Overall the USA economy is considered to have a solid performance.
Bullard said Monday the Fed chair should hold a news conference after every meeting so “there’s no additional importance given to any particular meeting“.
Williams wasn’t the only one to modestly break away from Yellen’s cautious tone. “And we will be looking at incoming developments, both financial and economic, to try to make sure we feel, really, that the USA economy is doing well”. Bullard doesn’t have a vote, but he will next year, and he said he would’ve dissented against the Fed’s decision last week. There has been considerable discussion about the timing of the rate hike. “It was an extraordinarily quiet night of news and that is making the (European and U.S.) weakness even more frustrating (the selloff is very inexplicable)”, J.P. Morgan said in a note issued before the start of trading.
Advertisement
Atlanta Fed President Dennis Lockhart said on Monday a rate hike later this year was still possible and that the Fed, in recent months, has added to the market instability and needs to refine its communication approach.
