18 August, AtoZForex.com, Lagos – As September draws closer, anticipation rises over the next course of action by the Fed. Interestingly, more pundits are expressing their against a September timing for the impending rate hikes. According former Fed Gov. Larry Lindsey, he said the Fed may have missed its ideal time for rate hikes.
Former Fed Gov. Larry Lindsey, who also served as director of the National Economic Council for President George W. Bush, stated the following: “I think they should have hiked . We are in a very difficult endgame right now. Looking at the Fed’s own behavior, I’d bet they’re going to take a pass in September. I think could have done it painlessly. There’s no cause and effect here. I think they’re running the risk of raising and then being embarrassed by a slowdown.”
Lindsey also dismissed the widely held notion of an economic acceleration in the second half of the year, saying: “We are not going to have an acceleration in the second half. I think if anything we’re going to have a deceleration. I think … 1.9 is probably about right for the year.”
In a similar vein, another former Fed member, Dallas Fed President Richard Fisher, China concerns are “much ado about nothing.” He was known as a hawk on rate hikes while with the Fed. Fischer opines that China’s recent currency devaluation is not enough of an excuse to prompt a delay in rate hikes from the Fed.
Last week, Atlanta Fed President Dennis Lockhart opined that economic conditions in the United States have improved. Returning to pre recession levels, while the Fed is on the brink to implement rate hikes any time soon. Yet, Dennis Lockhart was “disposed” to September rate hikes, clarifying that once the rate hikes begin, it will be gradual implemented as specified by Fed chair Yellen. He expects a gap of at least one policy meeting between any subsequent increases.
The dollar is up about 20 per cent for the year so far, with a possibility of going higher. A strong rally in the dollar is expected if the Fed eventually raises rates. This could push the EURUSD to parity as highly anticipated.