The divergence between the monetary policies of the Fed and ECB is the major talking point, according to Scherzando Karasu, External Journalist for ActivTrades, when he joined Zak Mir and Bill Hubard, Chief Economist for Bullion Capital, on the Tip TV Finance Show.
Key Points:
Karasu outlined that we are likely to see divergence between the ECB, who act next week, and the Federal Reserve who act two weeks later.
He added that inflationary pressure in the country are very different, with Eurozone core inflation being dragged down by the oil price.
The ECB are likely to ease next week in order to inject more liquidity into the market.
Karasu believed that the Fed will hike interest rates in March and June 2016, after the initial hike in December 2015, and then make sure there are no shocks in the US economy before deciding whether to continue.
He concluded that we are approaching unchartered territory with interest rates, as we haven’t has a hike in 10 years, whilst some countries are moving towards negative rates.
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