Rate hike: Question now is when Fed will raise it further

Investor sentiment was also subdued as traders awaited a speech on Thursday from Federal Reserve chief Janet Yellen hoping for clues about United States interest rates.

Elsewhere in the capital, two regional Fed bank presidents who had already backed a rate hike repeated their calls for the Fed to move. Boston Fed President Eric Rosengren spoke Monday and made similar comments.

NY Fed President William Dudley voiced his agreement in a speech Thursday.

“It is quite possible that the conditions the committee has established to begin to normalize monetary policy could soon be satisfied”, Dudley said Thursday at the Economic Club of NY. Dudley repeated the data dependency mantra and regardless on when the American interest rates do go up, they will do so gradually. That follows September’s retail sales being downwardly revised to no change, according to the Commerce Department. Fischer said a Fed rate hike will depend on how the economy is performing when officials meet on December 15-16. But the Fed has stuck with the status quo at near-zero levels 54 consecutive times. “But when you add the missing parts, the global economy no longer seems so benign for the outlook for U.S… growth and inflation next year”, he said. “While we believe a rate increase makes little difference to equity fundamentals, the timing and pace of subsequent hikes will likely be the more important factor for equity performance”.

But his assessment of “nearly balanced” risks represents a subtle shift in the thinking of a Fed member who has been hesitant to commit to a rate hike, but now sees evidence accumulating in favor of one.

She points out, as policymakers have said, monetary policy is not based on expectations but on the actual evolution of the data.

The conflicting messages from Fed officials reflect a shakier-than-usual economic recovery in the years since the 2008 financial meltdown pushed monetary policymakers to extremes. In January, WND reported fears that tapering QE to zero could cause interest rates to rise, risking a severe market correction.

As Americas central bank appears closer to raising rates with the rest of the developed world keeping them low, the dollar is strengthening, he noted. “Prudence alone suggests that, since the goals of policy have been met, we should be edging the policy rate and the balance sheet back toward more normal settings”, Bullard said.

The question of whether the Fed will raise interest rates by the end of the year is still very much in doubt.

“What a weak dollar giveth, a strong dollar shall taketh away”, the analysts said.

Cruz led the way, calling out the Fed’s “loose money” in the early 2000s for causing the real estate bubble, a reference to the period under Chairman Alan Greenspan when its benchmark lending rate was held under 2 percent from December 2001 until November 2004.