22 Dec 2014
Fed remains on course to raise rates from mid-2015 – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ expects Fed to remain on course to raise rates from mid-2015, with the San Francisco Fed President’s comments reinforcing the view for the hike.
Key Quotes
“The US dollar has remained stronger in the Asian trading session after the dollar index rose to a new cyclical high at the end of last week reaching its’ highest level since April 2006. The US dollar is deriving support from building investor expectations of a widening divergence in monetary policy between the Fed and the other major central banks in the year ahead.”
“The Fed signalled at last week’s FOMC meeting that it remains on course to begin raising rates from the middle of next year. That view has been further reinforced by comments late on Friday from San Francisco Fed President Williams, who becomes voting member on the FOMC next year, who stated that “I would say at this point that June 2015 seems a reasonable starting point for thinking about when lift off could happen”. He downplayed the effect of the recent sharp decline in the price of crude oil on inflation by stating that “you have to look through the short-term fluctuations of things, look to the next year or two ahead and think about where the economy is going to be…as monetary policy as we know takes a year or two to have its full effects”. As result, he stated that the Fed will probably be raising rates even before core inflation rises back to 2%.”
“He added that he already sees early signs of a pick-up in wage growth with the US economy likely to return to full-employment by the end of next year.”
Key Quotes
“The US dollar has remained stronger in the Asian trading session after the dollar index rose to a new cyclical high at the end of last week reaching its’ highest level since April 2006. The US dollar is deriving support from building investor expectations of a widening divergence in monetary policy between the Fed and the other major central banks in the year ahead.”
“The Fed signalled at last week’s FOMC meeting that it remains on course to begin raising rates from the middle of next year. That view has been further reinforced by comments late on Friday from San Francisco Fed President Williams, who becomes voting member on the FOMC next year, who stated that “I would say at this point that June 2015 seems a reasonable starting point for thinking about when lift off could happen”. He downplayed the effect of the recent sharp decline in the price of crude oil on inflation by stating that “you have to look through the short-term fluctuations of things, look to the next year or two ahead and think about where the economy is going to be…as monetary policy as we know takes a year or two to have its full effects”. As result, he stated that the Fed will probably be raising rates even before core inflation rises back to 2%.”
“He added that he already sees early signs of a pick-up in wage growth with the US economy likely to return to full-employment by the end of next year.”