US Federal Reserve will soon release the minutes for October‘s monetary
policy meeting, which had directly led to the Fed’s third rate cut in
the year- an action much in line with the market‘s general expectations.
On the other hand, the Fed has removed “taking appropriate action to
maintain economic expansion” from the interest rate statement. The
expression has been in the interest rate statement since June, paving
the way for the Fed’s rate cuts. Given that the US economy has rallied
more than the market had expected, this change of wording suggests that
the threshold for a further rate cut is very high.To get more news about
WikiFX, you can visit WikiFX news official website.
On November 13th (EST), the US Federal Reserve Chair Powell once again
emphasized his optimism about the US economy. He said, “sustained
expansion of economic activity, a strong labor market, and inflation
near our symmetric 2% objective as most likely.” At the same time,
Powell also admitted that uncertainties in the trade sector continue to
plague US corporate confidence and business investment, while foreign
economic slowdown can also hinder US growth. Policymakers will closely
observe all types of economic data to see whether they remain in line
with market expectation.
In addition, the Fed is not worried about inflation. Although Powell
still believes that the inflation rate is close to the 2% target set by
the Fed, it is clear that the historical model of the relationship
between price and the weak job market no longer prevail. The Fed used to
consider a 5% unemployment rate was almost full employment, but now
economists must admit that the US economy can operate at a much lower
unemployment rate.
Besides the Federal decision of interest rate cut announced at the end
of October, several key indicators are being released in the US
recently: The core CPI rose 0.2%, in line with expectations; PPI rose
0.4%, higher than the expected 0.3%... a series of breakthroughs in
important economic data indicate the US economy is rallying, and Fed
officials are generally optimistic about the countrys economic
situation. Survey data showed that the market estimates a 96%
probability for the Fed to hold interest rate unchanged, the remaining
4% implied odds are for 25 basis points.
With the release of the Fed‘s meeting minutes at the corner, what’s
your view about the monetary policy in the future？ Stay tuned as WikiFX
presents you more forex dynamics and market trend analysis that add to
your investment success.
The Wall