Will The Fed Finally Raise Interest Rates In December? - page 2

[Mirko Cerulli]

Here the graph of Federal Fund target rate:

[ffoorr]

why not :

https://research.stlouisfed.org/fred2/graph/?graph_id=132324&category_id=7964

https://donneeseconomiques.wordpress.com/

[Mirko Cerulli]

Well, I'll try to explain the "why not" reasons through data interpretation and Fed expectations:

1) Job(less):

Seems that Fed’s (real) intentions is that they would like to see the unemployment rate temporarily stabilize at something below the natural rate to allow for further reduction in underemployment. To accomplish this job growth will need to slow over the next year to that necessary to absorb growth in the labor force.

Wall Street believes that figure will be around 181,000 jobs. That would be considerably better than the 141,000 created in September. But 181,000 is still weak compared with what the BLS contends was happening earlier this year.

Lately, in fact, the economy has been so weak that even Wall Street economists — known for their unbridled optimism — are frowning.

If the actual number comes in higher than 181,000 — let’s say, 200,000 — Wall Street will worry even more that the Fed has the excuse it needs to raise borrowing costs. And the stock market could convulse if the number is too good.

Unemployment is falling toward precrisis levels and a new Fed labor market index that tracks a range of data has recovered most of the ground lost during the Great Recession. 

A very bad jobs report last month made the financial markets certain that Janet Yellen’s Federal Reserve would be unable to raise interest rates this year. Since then, a disappointing report on the nation’s gross domestic product, bad consumer-spending figures and other downbeat economic news reinforced that belief.

But the Fed put on the eerie music that plays in films whenever there’s going to be a sinister plot twist and announced last week that a rate hike was still possible in December.  

2) GDP growth slowed noticeably in the third quarter, dragging down recent trends.

3) Near term inflation perked up a bit in September, but still remains below target:

One might think that persistently low inflation eventually wears on inflation expectations.

Yellen, however, hesitates to embrace market-based measures of inflation expectations, discarding both measures thus leaves us with little guidance, unfortunately.

 

In the meantime, US stocks slip as Fed rate talk persists, and...

Interestingly, the University of Michigan’s survey of inflation longer-term inflation expectations continues to drift lower just as the Fed is considering rate hikes:

 

Contrast with the cycle of tightening in the middle of the last decade:

The Fed’s stimulus campaign has encouraged borrowing and risk-taking, which officials say have contributed to economic recovery and job growth. Those benefits will diminish as rates rise.

 

[Mirko Cerulli]

These are the main internal reasons... Without considering other external influences:

https://www.mql5.com/en/blogs/post/652939 

[ffoorr]

The logic is very simple. While the ECB is still aggressively pumping money into the system, 
it is impossible for other central banks to tighten. Through the currency markets, 
it would wreak too much havoc on their own economies.
 And since it looks impossible for rates to rise in Europe any time soon,
 they are not going to rise anywhere else.

 

 I don't see any logic.

If growth come in USA, inflation will raise and FED will raise interest rate ... this will wreck awok in europe first, and then in the USA, by counter reactiion.

What are the sign of economic growth in the USA ?

velocity of money is at his lowest : https://research.stlouisfed.org/fred2/graph/?graph_id=131842&category_id=7971

so is the real estate, so is the inflation,

So  Keep an eye on the initial claim and duration of unemployement, and wait and watch

[Mirko Cerulli]

ffoorr:

So  Keep an eye on the initial claim and duration of unemployment, and wait and watch

Undoubtedly one of the most important data for "data dependent Fed's politic".

Yellen continues to stress that the Fed's timing will hinge on the next string of economic data...

The Fed expects that “the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term, and if the incoming information supports that expectation, then…December would be a live possibility,” Ms. Yellen said while testifying before the House Financial Services Committee.  

ffoorr:

 

 I don't see any logic.

If growth come in USA, inflation will raise and FED will raise interest rate ... this will wreck awok in europe first, and then in the USA, by counter reactiion.

Here the logic. It appears that the Fed has channeled the tactics of the ECB, which has successfully positioned expectations for its own upcoming monetary policy changes by signaling the “next meeting” as the time for a rate hike and this seems to have worked.

Wait and watch. 

[[Deleted]]

december rate hike chances are increased even Fed does not know what they will do just wait and see

[Mirko Cerulli]

Killufx:
december rate hike chances are increased even Fed does not know what they will do just wait and see

True.

[Md. Shahadat Hossain]

i think no, bcz usd getting stronger without hat, they will keep that card for later use.

[Eslam Mohammadi Homounlou]

Good luck