Two words will frame the Federal Reserve’s path ahead: “data dependent.” If history holds, though, the phrase is more campaign slogan than reliable policy standard.
Almost since it began its ultra-easy policy in late-2008, the Fed has stressed the importance of tying economic metrics to policy moves. When it came to decision time, however, the U.S. central bank’s Open Market Committee has consistently moved the goalposts when any data point came close to meeting its prescribed targets.
Unemployment, for instance, has long since dropped below the original stated 6.5 percent threshold that would trigger a rate hike. Gross domestic product, which is the broadest measure of economic growth, has had just three negative quarters total since the recession ended in mid-2009, and each of those came in the first quarter—2011, 2014 and 2015. The first two were followed by growth of 2.9 percent and 4.6 percent, respectively, and the second quarter of 2015 is tracking at 2.1 percent, according to the Atlanta Fed.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.