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Jason

Fed Hints At End To Us Rate Rises

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"The US Federal Reserve could soon consider an end to its current cycle of "measured" interest rate rises, minutes of its latest meeting have suggested.

The central bank raised rates for the 12th time in a row at the start of the month from 3.75% to 4%.

Policy setters voted unanimously for a rise in November amid fears that high fuel prices were a risk to inflation. But, the minutes showed some members had voiced fears that "risks of going too far" could eventually emerge. "

More: http://news.bbc.co.uk/1/hi/business/4461476.stm

From Reuters: http://today.reuters.com/news/newsArticle....ECONOMY-FED.xml

Edited by Jason

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That'll bring the hung over bears out tomorrow....... :lol::lol:

Does anybody have any info on whether there is any meaningful (in a mathematical sense) correlation between interest rates in the US, UK and EU? I'm yet to be convinced, although happy to be enlightened either way. Anyone?

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That'll bring the hung over bears out tomorrow....... :lol::lol:

Read the article IN FULL mate. It is just twaddle. A couple of them have expressed concern about not going too mad.

However, they voted unanimously to raise. . . . . .

Also, they have recently been hinting about increasing the pace of the rises.

If this is the best you have got to laugh at, you really are in trouble.

:lol::lol:

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Guest muttley

Still more Fed hikes to come,I'm afraid.

Minutes of the Federal Open Market Committee's Nov. 1 meeting suggest that a change is possible in what policymakers tell markets about the future.

In particular, the minutes suggest that the pledge for a "measured pace" of rate hikes might be removed from the statements as early as the next meeting on Dec. 13th.

Investors view the removal of the pledge as a precondition to an eventual end to Fed tightening. Rate hike odds have changed accordingly, with the market now priced for about 40% odds of a hike at the March 28th FOMC meeting, down from 58% yesterday and about 80% a week ago.

In other words, the market is of the belief that the Fed will raise interest rates at the next two FOMC meetings, and then stop at 4.50%.

http://www.thestreet.com/_tscana/comment/c...e/10254151.html

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Yes but reading the minutes of the meeting, it says that inflatinary pressures remained subdued because of the prediction of future rate rises already factored in by the markets.

"It was noted, however, that longer-term expectations of inflation remained contained in the context of an increase in the extent of additional monetary policy tightening expected in financial markets."

I think what this means is that further rate rises are likley, but may not be as rapid as previously thought, and could easily be held / reduced based on economic predictions. It is also based on the fact that energy prices have lowered recently and this has taken some of the steam out of short term inflationary pressures.

however they still exist .... "While gasoline prices had recently moved lower, the cumulative rise in energy prices and other costs was seen as having the potential to add to inflation pressures."

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Reuters: http://today.reuters.com/news/newsArticle....ECONOMY-FED.xml

"There has been speculation that two more quarter-point rate rises may lie ahead though some feel that Ben Bernanke, the nominee to replace Federal Reserve Chairman Alan Greenspan at the end of January, may want to levy a third hike as a type of anti-inflation marker."

Edited by Jason

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A couple of points:

1. It is Christmas. They want people to spend in the shops!

2. Ben Bernanke wants to proove himself a hard man on inflation so will want to have an IR increase on the day he takes over from Greenspan.

3. Everything I am reading is indicating another two IR increases between now and March, possibly three.

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Something's gotta give in America... :blink:

"And they are investing in the other asset that is no one else's liability - gold. Certainly the Arabs are less inclined to finance American consumers than the Chinese and are more worried, as investors, about the sustainability of the US current account deficit.

The US dollar is rising at present - along with gold - because of a short-term arbitrage on cash rates as the Fed continues to push them towards 4.5 per cent, whence chairman Ben Bernanke is likely to stop and sit on the sidelines for a while. Bond yields have also been rising gradually because global growth is surprising on the upside (not because of inflation expectations, which are not rising).

This situation cannot last. American financial assets will have to be repriced eventually, either directly or through a depreciation of the currency, or both."

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Something's gotta give in America... :blink:

"And they are investing in the other asset that is no one else's liability - gold. Certainly the Arabs are less inclined to finance American consumers than the Chinese and are more worried, as investors, about the sustainability of the US current account deficit.

The US dollar is rising at present - along with gold - because of a short-term arbitrage on cash rates as the Fed continues to push them towards 4.5 per cent, whence chairman Ben Bernanke is likely to stop and sit on the sidelines for a while. Bond yields have also been rising gradually because global growth is surprising on the upside (not because of inflation expectations, which are not rising).

This situation cannot last. American financial assets will have to be repriced eventually, either directly or through a depreciation of the currency, or both."

Once M3 stops coming out (March), there is nothing stopping the FED from printing as much as they have paper to print on. Money does indeed grow on trees (or more correctly in them).

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The Fed will cut rates as soon as the bubble bursts in the US to stave off a consumer lead recession, at which point the yield curve will invert, an unavoidable credit crunch will ensue followed by the dreaded deflationary recession that the Fed have been trying to avert for the past ten years. Current Fed hikes are window dressing.

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"The US Federal Reserve could soon consider an end to its current cycle of "measured" interest rate rises, minutes of its latest meeting have suggested.

The central bank raised rates for the 12th time in a row at the start of the month from 3.75% to 4%.

Policy setters voted unanimously for a rise in November amid fears that high fuel prices were a risk to inflation. But, the minutes showed some members had voiced fears that "risks of going too far" could eventually emerge. "

More: http://news.bbc.co.uk/1/hi/business/4461476.stm

From Reuters: http://today.reuters.com/news/newsArticle....ECONOMY-FED.xml

Yeah, I suggested that COT figures suggested this could be the case earlier in the day:

end to tightening sooner rather than later

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1. Historically the Fed has kept on raising rates until something breaks in the ecomomy. Something crashes, a big corportation goes bankrupt, there's a recession etc. and THEN they stop raising rates.

2. The gold price has been rising recently in a range of currencies, not merely the US Dollar. This suggests that the market is expecting future inflation or some other economic strife.

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The Fed are very fast though. A step too far & they wouldn't be shy to reverse it quickly. Unlike the BOE IMO.

Yes, valid point, although I have to laugh when I hear some tools on US Business TV castigating the ECB for being "so far behind the Fed. they haven't even taken the first upward step", ignoring the fact that the ECB didn't follow the Fed. down in the first place.

However, the Fed's language still talks about "removing accomodation at a pace likely to be measured". That implies they think they haven't even reached the start of the 'normal' range yet, but still cutting away the abnormal stimulus.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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