Dollar steady as traders await clarity on Fed rate hike path

Gold futures were lower Tuesday morning as the Federal Reserve prepared to meet in Washington, DC.

It’s little surprise, then, that every one of the 78 economists tracked by Bloomberg expects the Fed to raise the upper bound of the federal funds rate to 0.75 from 0.50 per cent.

Consumers’ ages may determine whether the interest rate increase is good or bad news, while those considering buying a house may be pushed into making a decision quickly.

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You are reading news and information on LongIsland.com, Long Island’s Most Popular Website, Since 1996. Traders see Trump’s policies as inflationary, and they’re gambling the Fed will have to raise rates in the future.

Federal Reserve has been quite sensitive towards the economic data and Janet Yellen is known to be data-driven.

Whatever message they send, Fed policymakers will have had much to discuss during their two-day meeting, having not met since President-elect Donald Trump’s surprise election victory November 8.

From an external perspective, the prospect of tightening financial conditions from a rate hike should not concern the Fed as much. In December 1965 Lyndon Johnson famously summoned Fed Chairman William McChesney Martin to his ranch in Stonewall, Texas, to confront him over Martin’s decision to lift rates.

Rates on some other loans, though, like credit cards and home equity credit lines, will likely rise, though probably only slightly as long as the Fed’s rate hikes remain modest.

Uncertainty tends to push investors to safe havens such as gold, so the metal could see a short-term bounce.

Turnill said while markets will be eyeing clues as to how many moves may follow in 2017, the company now expects two rises next year. A more cautious outlook, by contrast, would signal that the central bank expects to further raise rates only incrementally.

In the arcane world of Fed-speak, seemingly trivial word changes can sometimes have a major impact.

Rather than making plans based on policies and outcomes that are still unknown, the central bank is taking more of a wait-and-see approach, he said.

The markets have factored in a 25 basis point rate hike from the US Federal Reserve tomorrow.

The unemployment rate last month fell to a nine-year low of 4.6%, and recent economic reports point to an improving economy. Growth in industrial production accelerated to 6.2 percent over a year earlier from October’s 6.1 percent.

At the end of the two-day gathering on Wednesday the Fed will also release its latest economic forecasts. It would be the only rate hike this year.

As of September, Fed officials’ median projection was for two rate increases next year. “Investors haven’t been easily spooked recently but the prospect of three or four rate hikes next year may be enough to do it”. “The risk would be if Mr. Trump started to draw attention to the Fed and got more people on board for making change”.

On the campaign trail and since the presidential election, Donald Trump called for infrastructure investment and lower taxes for individuals and businesses.

As for India, the region’s other big economic giant, it is likely to see some short-term disruption from de-monetisation – the government’s decision to withdraw 500 and 1,000 rupee-denominated notes nearly overnight and issue new ones – but the likely implementation of a Goods & Sales tax in April 2017, and the potential for lower interest rates in the next 12 months, should bode well for the country.