US Federal Reserve Chairwoman, Janet Yellen stated last week that Fed interest rate increases will come slowly in the months ahead amid tepid growth overseas and divergent monetary policies between the US and other nations. But Central Bank Governor Erdem Basci has indicated that Turkey may raise rates once the Fed does.
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The analysts concluded, however, that while “global forces have some impact on domestic wage growth” it doesn’t change the fact that if slack in the USA labor market tightens wages will rise for US workers.
Bank of England policymakers are expected to keep interest rates at record lows, but the decision comes as the US Federal Reserve is poised to make its first increase in almost a decade. And with eight out of nine members of the Bank’s Monetary Policy Committee (MPC) voting to hold again in December, change is not expected any time soon. Another $26 billion in six-month bills was auctioned at a discount rate of 0.535 per cent, up from 0.415 per cent last week.
“With the Fed’s decision likely to increase financial market volatility and (south) Korea’s household debt rising, I don’t think the BoK would cut interest rates in the foreseeable future as it would exacerbate the problems”, Seo said.
“Domestic demand has started to recover and GDP growth has bounced back, reducing the pressure for the BOK to cut rates”.
“If the Fed is on track, then that means the perception should be the USA economy is as well”, Mr. Drusebjerg said, adding a rate rise would take some uncertainty out of the market.
Despite the lower unemployment and returning wage growth, there’s no sign of any inflation – due to plunging oil prices, consumer prices have been bobbing along at around zero growth for most of 2015.
The central bank expects inflation to remain below 1 percent until the second half of next year.
The bank said the short-term inflation outlook has improved since the November forecast and a stronger krona and more favorable global price developments provided the scope to lift interest rates more slowly than was previously considered necessary.
He also voted for a quarter-point rise at each of the previous four meetings.
CACIB economists are looking for unchanged voting split with Ian McCafferty still dissenting and voting for a hike.
Carney’s earlier messages about the possible timing of a rate hike were knocked off course by surprises such as the plunge in oil prices a year ago.
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Treasury 30-year bond yields dropped by five basis points, or 0.05 percentage point, to 2.96% as of 5 p.m.in NY, according to Bloomberg Bond Trader data.
