Fed’s December lift-off is a clear possibility – Swissquote Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 19, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Yann Quelenn, Market Analyst at Swissquote Bank, suggests that usually three weeks after each FOMC, the Fed minutes were largely awaited and it seems that Fed members have judged that US economic conditions have expanded at a decent pace in recent months and a December lift-off is clearly a possibility.

    Key Quotes

    “However, the Fed remains concerned about the accomplishment of its dual mandate. Inflation is holding way below the 2% target and the pace of job gains slowed. In addition, we believe that the Fed is almost obliged to symbolically increase its rate and end the zero interest-rate policy for credibility reasons. Janet Yellen in particular, has to show that the situation is in control.”

    “Yet, the Fed’s committee, which removed the word “patience” in its (already 8 months ago) March statement, ironically appear to be very calm. We believe that the next NFP figure will be decisive factor in whether or not interest rates will go up.”

    “The Fed also added that they would assess “a range of labour market indicators over the period to confirm further improvement in the job market”. At some point, being so afraid to raise interest rates by a quarter point after 3 massive quantitative easing sounds contradictory.”

    “The Federal Reserve also remains focused on the impact of lingering low commodity prices. There is still a non-negligible risk that downward pressures on inflation due to a strong dollar will continue. We remain bearish on the EURUSD.”
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