Fed will have three bites of the apple – TDS

By FXStreet FXStreet (Guatemala) – Analysts at TD Securities explained that the case for a December liftoff was presented by Fed Chair Yellen earlier this month.

Key Quotes:

“In her remarks she expressed confidence in the growth and inflation outlook, providing an unequivocal signal that she believes that the conditions to raise rates from the ZLB have been met. Of particular interest, Yellen stated that “although the economic outlook, as always, is uncertain, I currently see the risks to the outlook for economic activity and the labor market as very close to balanced.” This upgraded risk assessment is an indication that the deck is clear for a rate hike, and it reflects a greater confidence in her ability to convince her colleagues to raise rates.”

“The market is fairly priced for a hike, and the near unanimity among professional forecasters suggests that the Fed has a free option to raise rates. Nevertheless, even with the takeoff clearance there remains the delicate task of guiding expectations for the future path of rates. Managing the message will be central to the Fed’s communication effort with the markets.”

“The communication challenge facing the Fed is highlighted by the necessity to achieve the fine balance between instilling confidence in …read more

Source:: FX Street