Federal Reserve recently announced the rate increase in a FOMC Meeting earlier this month.
This decision came after a lot of procrastination on part of Federal Reserve.
Central Banks are the biggest players in the market.
Central Banks have the power to create a lot of money in the market.
This is known as Quantitative Easing (QE) in modern terms.
Quantitative Easing has also being called Helicopter Money.
Will this policy of QE work?
Federal Reserve has been accused of creating bubbles in the economy.
These bubbles become very painful when they burst.
Read this blog post in which I explain how Central Banks are losing their ability to pilot economies.
A few months back Royal Bank of New Zealand (RBNZ) announced a rate cut.
The market reacted wildly and instead of depreciating, New Zealand Dollar appreciated.
It seems markets are becoming oblivious to Central Bank signals.