NY Fed chief: Rate hike coming this year

So if you’ve been waiting with bated breath to see whether the Federal Reserve would raise interest rates or not, at least after watching this video you can say, “Now I get it”. Over the past 30 years, there have been 4 major tightening cycles in 2004, 1999, 1994 and 1986.

With the US Federal Open Market Committee taking a pass on hiking rates for the first time in almost a decade earlier this month, uncertainty over the bank’s policy path has heightened.

While a stronger krona and <strong>globalstrong> price developments allowed to raise <strong>interest ratesstrong> somewhat more slowly than was previously considered necessary, they do not change the need for a tighter monetary stance in the near future, the <strong>bankstrong> said. For example, if the Fed wants to increase the money supply in the economy, it will tell banks to hold on to less, so they can lend more to businesses and people. Japan’s economy is performing much worse than anticipated. Still, pending sales are 6.1% above year-ago levels, reflecting a step-up in purchases in 2015. As the rest of the world is a lot scarier and harder to predict than the USA central bank, the implication may be higher risk premia and lower market prices.

The longtime opponent to the Federal Reserve claims that foreign exchange markets will eventually figure out what USA policymakers are doing, and then we will be facing a currency crisis which could lead to a USA and global stock market crash.

The euro was hit hard today by weaker than expected economic data. The price of the 2 percent security due in August 2025 fell 6/32, or $1.88 per $1,000 face amount, to 99 15/32. On the other hand, Dr. Reddy’s Lab was up by 1.59% and Infosys was up 0.03%. The USA dollar has begun to cool down. The latest United Kingdom economic reports were mixed. It is important that pro-active supply-side management by the government be in place to head off any food price pressures should they materialise, especially in respect of onion and pulses. The main focus this week for sterling is tomorrow’s UK PMI manufacturing report. In the United States, industrial production slowed as capital spending in the energy sector was cut back and exports contracted, weighed down by the strength of the USA dollar. GBP/USD is a high volatility pair and when it reverses the move can be strong ranging from 200 to 800 pips. The long-term 30-year treasury yield edged up as well, closing the trading day at 2.96%.

Disposable income, which is what we actually have to spend, not what we earn, rose strongly for the fifth consecutive month. The Index is only 5.5% below the peak reached during the housing bubble.

He said the central bank would not deliberately “overshoot” the inflation target, but after the damage done by the 2007 to 2009 recession he said he also saw value in letting unemployment fall as low as possible even if that means a faster pace of price increases. Allied farm activities, which are more insulated from the monsoon, remain resilient and could partly offset the effects of adverse weather on crop production.