He now sees a stronger case for the policy making Federal Open Market Committee to raise rates.
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Investors and analysts now regard a December increase as all but certain, barring unexpected developments.
There are concerns, however, that the US economy is slowing, and that could be what stops the Fed from moving in December. The heavy political baggage of raising rates during an election cycle would probably preclude a hike after March, Anderson said. The October FOMC had no press conference afterwards so a lot of doubts remain on what exactly did the Fed discuss before issuing a statement that paved the way for a December rate hike.
The key for financial advisers will be the ability to look past the initial reaction toward a reality that, for the most part, won’t be much different than it is the day before the Fed decides to raise rates.
Unfortunately, managing the largest economy in the world is never that simple and the Fed will also be looking at near zero inflation despite all of their quantitative easing (monetary stimulus) as US CPI (YoY – year on year) threatens to go below 0%.
In Latin America, the dollar traded higher against the Colombian peso (up 1.58%), Brazilian real (up 1.47%) and Chilean peso (up 0.35%), but fell against the Mexican peso (down 0.14%).
“We’re speaking about going from an extremely-accommodative financial coverage to an especially accommodative financial coverage”, mentioned Tom Nelson, senior vice chairman and director of funding options at Franklin Templeton. For much of Janet Yellen’s tenure as Fed chair, policymakers at the core of the committee, and Yellen herself, have said they would rather delay a rate hike and battle inflation than hike too soon and brake the recovery.
Evans indicated he saw little merit in that argument, adding that in his view monetary policy independence is crucial to effect policymaking. “We have room to accelerate if we find out that we wish we’d started earlier”.
“I think rates have already risen, and it’s already priced into the bond market”, Mr. Tipp said. “Also, the global outlook appears less problematic than it did just a few months ago”.
Claims have been trending downward since 2009, and employers have been reluctant to lay off workers, which suggests that the labor market is getting tighter, The Wall Street Journal explained. That follows September’s retail sales being downwardly revised to no change, according to the Commerce Department.
The commodity markets have seen considerable price action in recent days with the oil price continuing to fall.
So it’s a bit irksome to hear Republicans, many of whom are in Congress, spouting on about the Fed’s poor policy when they are the ones who endorsed a policy mistake in pursuit of political and ideological objectives.
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“Avoiding a Japan-like experience, in which inflation expectations have become unanchored to the downside, should be an important consideration in the conduct of monetary policy”, Dudley said.
