Menu

Search

  |   Insights & Views

Menu

  |   Insights & Views

Search

FED warns hike-skeptics through clearer message

October FOMC statement can best be seen as FED's take on punch to the skeptics and clearing the air of FED's intention. Though the actual uncertainty prevailed over, when the FED will actually be able to hike for the first time, there couldn't have been a clearer message over their intention.

Clear message 1

  • FED sent a strong signal that they are going to hike rates at the first chance, when circumstance approves by keeping the December hike option in place. FED has been exclusive in mentioning the "Next" word, referring to December meeting and suggests they would evaluate situation to consider whether to hike or not.

Clear message 2 

  • FED is confident over US economy. Shrugged off recent NFP weakness by suggesting labour market slack/underutilization diminishing. Moreover strengthen its language regarding consumer spending and business fixed investment to solid.

Clear message 3 

  • FED not too concern over Dollar. It fairly accepts that monetary policy divergence is likely to strengthen Dollar. This meeting came after ECB's announcement to act (almost likely) in December, which would inevitably strength Dollar whether FED hikes or not. Even then rate hike is on the table.

Clear message 4 

  • China seems to be less of a concern now along with emerging markets. FED loosened the language to just "monitoring" international developments.

Dollar has naturally strengthen over the board and probability of a hike in December has moved up considerably. Dollar index is currently trading at 97.39, down -0.25% today so far.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.