More interest rate hikes to come

Williams continued: “I do think the slope is the most important thing to communicate, the pace of increases”.

Hedge funds and money managers switched to a bearish position in COMEX gold contracts in the shortened week to November 17, as prices fell to the lowest in almost six years, US Commodity Futures Trading Commission data showed on Friday. If they set their actual benchmark overnight fed funds rate below that neutral rate, policy will be relatively easy and help spur inflation. Those periods where the Fed did were characterized by fairly large equity market pullbacks, spanning from 18.5% to 46.5% with an average drawdown of 28%.

While stocks often sell off on the prospect of a rate hike, which would raise borrowing costs, many investors are now focusing on a hike as a positive reading for the economy.

Second, the United States is the only developed economy whose central bank is tightening monetary policy now. Now that the US economy has recovered, the Fed has been planning to start increasing short-term interest rates, with the aim of keeping inflation in check. For the moment, it doesn’t appear that the central bank is laying the groundwork for a rate hike.

TEMPO.CO, New York-The dollar rose to an eight-month high on Monday amid heightened expectations that the U.S. Federal Reserve might raise interest rates next month, driving down the prices of copper, gold and other metals.

The discount rate is the interest rate charged to commercial banks on loans they receive from their regional Federal Reserve Bank lending facilities, also known as the discount window. Post the global recession, capital increasingly moved away from the US towards riskier emerging markets in search of higher returns.

Past month, Nader issued an open letter to Yellen wherein he argued that low interest rates were hurting savers unfairly.

His pledge to “do what we must” to lift prices fueled expectations the bank could expand its already vast easing scheme next month, dragging the single currency to its lowest point since mid-April.

The US markets are closed Thursday for the Thanksgiving Day holiday. “There is a ceiling on how much more it can raise rates because of the appreciation of the dollar”, she said.

Ms Stupnytska is predicting a further two rate hikes next year, which will bring rates to just under 1 per cent by the end of next year.

“Because the Fed is so data dependent, it’s very hard to say further out than next year what is going to happen”, he says.

Ahead of the central bank’s October 27-28 policy meeting, directors of the Boston Fed joined their counterparts in St. Louis, Atlanta, San Francisco, Cleveland, Dallas, Philadelphia, Kansas City and Richmond in asking the Fed’s board to increase the discount rate to 1 percent from 0.75 percent, according to the minutes.

The journey back to normal interest rates will most likely begin with a small step next month.