vendredi 13 février 2015
Expected Fed hike in June may coincide with ugly reality: falling prices
Posted on 17:52 by nice news
If inflation expectations remain a prerequisite for higher interest rates, a widely forecast mid-year rate hike from the U.S. Federal Reserve is still not cast in stone.
The timing for the first interest rate hike in years for the world’s largest economy from 0-0.25 percent has been a matter of speculation for much of the past year and has set the course for currencies, bond yields and stock markets globally.
Even if symbolic, economists and Wall Street dealers predict the first hike will come in June — mainly because Fed policymakers seem to have done just about everything they can short of promising to raise rates then.
But that lands in precisely the same three-month period when economists, according to the latest monthly Reuters poll, expect inflation to dip below zero – meaning prices will likely be falling compared with a year ago.
This is a sharp downgrade from an expected 0.4 percent rise predicted just last month.
It also would mark the lowest point for U.S. inflation since October 2009 when policymakers the world over were terrified about prospects for a deflationary recession from which the U.S. economy is only now beginning to bounce back strongly.
The timing for the first interest rate hike in years for the world’s largest economy from 0-0.25 percent has been a matter of speculation for much of the past year and has set the course for currencies, bond yields and stock markets globally.
Even if symbolic, economists and Wall Street dealers predict the first hike will come in June — mainly because Fed policymakers seem to have done just about everything they can short of promising to raise rates then.
But that lands in precisely the same three-month period when economists, according to the latest monthly Reuters poll, expect inflation to dip below zero – meaning prices will likely be falling compared with a year ago.
This is a sharp downgrade from an expected 0.4 percent rise predicted just last month.
It also would mark the lowest point for U.S. inflation since October 2009 when policymakers the world over were terrified about prospects for a deflationary recession from which the U.S. economy is only now beginning to bounce back strongly.
Expected Fed hike in June may coincide with ugly reality: falling prices
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