Neel Kashkari Rate Hike Warning Fuels Fed Doves


Minneapolis Federal Reserve Bank President said on Monday he voted against the Fed’s decision to raise interest rates last week. However, Neel Kashkari Rate Hike Warning Fuels Fed Doves over worries on weak inflation and a flattening of the yield curve.

19 December, Swissquote – Global markets are celebrating US tax reform. Asian stocks followed the record session on Wall Street. This bull market keeps running past forecasts, and profit-taking to lock in a solid year is not happening.

Equity enthusiasm 

The World Bank increased its forecast for China’s economic growth in 2017 to 6.8% up from 6.7% in October. In 2018 China is likely to outpace consensus forecast. Our view of China and its RMB currency have brightened.

The Bank of China’s 5-basis-point hike in front-end reverse repo and 1-year medium-term lending facility rates was less about managing immediate threats and more about signaling a tightening bias across monetary, regulatory and liquidity policies.

Neel Kashkari Rate Hike Warning Fuels Fed Doves

With a warning from US Federal Reserve banker Neel Kashkari that increasing interest could trigger a recession, dollar doves are alive and vocal. We believe they will prevail enough to block some additional hikes. We are the seller of USD in the mid-run against high yielding emerging market and G10 currencies.

Last week meeting the Fed voted for a 0.25% hike and increased its 2018 real GDP forecast, reflecting the boost of tax reform. Yet the policy projections were left broadly unchanged.

Disclaimer

This article ‘ Neel Kashkari Rate Hike Warning Fuels Fed Doves ‘ was written by Peter Rosenstreich, Market Analysts at Swissquote.

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