Fed: Gradual means 4 and is data-dependent – Rabobank

By FXStreet FXStreet (Delhi) – Philip Marey, Senior US Strategist at Rabobank, notes that as widely expected (although not until recently), the FOMC decided to raise the target range for the federal funds rate to 0.25%-0.50% from 0.00%-0.25%.

Key Quotes

“In order to actually get the fed funds rate in that range the Fed also raised the IOER (interest on excess reserves) rate to 0.50% from 0.25% and it set the new ON RRP (overnight reverse repo) rate at 0.25%.

The FOMC judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective. Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to hike.

Gradual means 4

The FOMC statement stressed the gradual nature of the hiking cycle twice. Firstly, it said that the Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen. Secondly, it said that the Committee expects that economic conditions will evolve in a manner that will warrant only …read more

Source:: FX Street