U.S. Federal Reserve is "not remotely close" to needing to consider negative interest rates
Feb 18, 2016 02:38GMT
Last night at St. Louis, Fed President James Bullard said that the U.S. Federal Reserve is "not remotely close" to needing to consider negative interest rates and despite rising global risks, the U.S. economic outlook remains reasonably strong. There is not a need of the negative rates being used in Europe and Japan to try to encourage growth.
Even as Bullard suggested Fed rate hikes may proceed more slowly than expected, US are just not in the situation sitting here today where we would be thinking about those kinds of moves.
More on his comments, Bullard stressed that there is no advantage in choosing a higher inflation target, with the too-big-to-fail banks that remain an issue, there is a "long way to go" to fix these problems. The effort to curb this too big to fail should focus on ways to limit leverage.
Bullard continued to suggest that it is 'unwise' to continue hiking rates amid falling inflation expectations. The recent decline in equity and corporate bond markets decreases risk of asset bubbles, giving Fed 'more leeway' in its rate hike decisions. With the drop in inflation outlook and financial volatility that have undercut some of the core assumptions around which Fed's December rate hike was based.
The quarterly interest rate path projections of Fed officials may be counter productive, giving markets the sense that rates are on a set path rather than data dependent.
He expects U.S. and global growth to strengthen in 2016, with lower longer-term interest rates providing a boost.
http://www.acetraderfx.com
AceTrader has been in FX market since 1984, with proven analytical approach used by professionals and real-time updates
Feb 18, 2016 02:38GMT
Last night at St. Louis, Fed President James Bullard said that the U.S. Federal Reserve is "not remotely close" to needing to consider negative interest rates and despite rising global risks, the U.S. economic outlook remains reasonably strong. There is not a need of the negative rates being used in Europe and Japan to try to encourage growth.
Even as Bullard suggested Fed rate hikes may proceed more slowly than expected, US are just not in the situation sitting here today where we would be thinking about those kinds of moves.
More on his comments, Bullard stressed that there is no advantage in choosing a higher inflation target, with the too-big-to-fail banks that remain an issue, there is a "long way to go" to fix these problems. The effort to curb this too big to fail should focus on ways to limit leverage.
Bullard continued to suggest that it is 'unwise' to continue hiking rates amid falling inflation expectations. The recent decline in equity and corporate bond markets decreases risk of asset bubbles, giving Fed 'more leeway' in its rate hike decisions. With the drop in inflation outlook and financial volatility that have undercut some of the core assumptions around which Fed's December rate hike was based.
The quarterly interest rate path projections of Fed officials may be counter productive, giving markets the sense that rates are on a set path rather than data dependent.
He expects U.S. and global growth to strengthen in 2016, with lower longer-term interest rates providing a boost.
http://www.acetraderfx.com
AceTrader has been in FX market since 1984, with proven analytical approach used by professionals and real-time updates
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