Wednesday, 14 December 2016

The future of the dollar after Fed (Part 2)

The reasons the Fed wants to increase the interest rate are few as two members even voted for the immediate lifting. In addition there are also improvements in the US economy as consumer spending, which are on the rise, job growth, low unemployment, higher consumer prices and housing market. These improvements led to a rapid increase in inflation and to avoid this Fed should immediately raise interest rates.
As for how interest rates rise will affect the US dollar, it is expected that there will not be a significant change, unless the Fed does not surprise markets with lifting with half a percentage or with a refusal to do that.
There are different possible outcomes of the meeting of the FOMC, which will determine the movement of the US dollar. Depending on the expectations and comments by Janet Yellen, the future of the greenback could largely be understood. If Yellen declares long-term pause or obscure term for subsequent lifting of interest rates, it can be expected more aggresive fall of the dollar. On the other hand, if Yellen expressed optimism about the economy and the need to tighten monetary policy, a new growth of the  dollar is not excluded.


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