Is the Fed’s Stimulus Package and Inflation Time Bomb?
The Fed’s announcement will be upon us very soon. Traders now wait with baited breath to see whether the Fed will deliver just what everyone expects them to deliver. They will probably restart the asset purchasing program this evening even as growth is expected to accelerate to 2.6 in the second quarter of next year. The concern in the market is that the Federal Reserve could be underestimating the inflation outlook for the US Economy for the second time in less than a decade.
This could substantailly shake things up in the currency and bond markets. By 2012 the stimulus package could easily accelerate inflation past 2%, beyond the Fed’s preffered range. Since December 2008 the Fed has kept interest rates at record low levels and have tried to stimulate the US Economy out of one of the worst recessions since the 1930’s. The asset purchase program expected this evening will extend the the Fed’s aquisitions of $1.7 trillion in treasuries and mortagage debt that finished at the end of March earlier this year.
Tomorrow has a busy calender with plenty of event risk, we have the MPC and ECB rate announcements, the ECB press conference and jobs data from the US. We would expect the markets to respond with volatility. Most analysts are still pitching for further USD weakness and stock market gains although this evenings Fed announcement will undoubtedly set the trend for trade going into tomorrow.
Luke Zorab
Torfx Currency Dealer
(01736) 335285
Most Popular Content
- Pressure Mounts on the British Pound Following Autumn Budget
- Impact and Outlook for the U.S. Economy on Rate Cut
- Gold and Copper Markets Respond to Powell
- US Stock Market Faces Turbulence and Mixed Commodity Reactions
- Pound Holds Strong as Labour Wins with a Landslide
- Crude Oil Prices Rally as Inventory Declines and Rate Cut Hopes Emerge
- Strength in Gold and Copper Continues – But for How Long?
- Weak Payroll Data Sends Stocks Higher
Currency Articles - Nov 3, 2024 13:35 - 0 Comments
Pressure Mounts on the British Pound Following Autumn Budget
More In Currency Articles
Gold and Oil News - Aug 24, 2024 16:06 - 0 Comments
Gold and Copper Markets Respond to Powell
More In Gold and Oil News
- US Stock Market Faces Turbulence and Mixed Commodity Reactions
- Crude Oil Prices Rally as Inventory Declines and Rate Cut Hopes Emerge