US Fed faces big decision over a few choice words

Publish date: Tue, 16 Dec 2014, 01:17 AM

NEW YORK: Federal Reserve officials will decide this week whether to make a critical change to their policy statement that would widen the door for interest rate hikes next year and effectively bet the United States will continue to shine in a gloomy global economy.

In one of the last major wild cards for financial markets this year, the US central bank's policy-setting committee is to issue the statement and fresh economic forecasts at 2pm local time tomorrow. Fed chairman Janet Yellen will then hold a news conference at 2.30pm.

The US economy has strengthened and jobs have been created at a faster-than-expected clip since the Fed's last meeting, when it repeated that benchmark rates were unlikely to rise for a "considerable time".

The Fed has been toying with dropping the "considerable time" phrase since at least September.

If the phrase is dropped, as many Wall Street economists expect, the Fed could replace it with a pledge to be "patient" in an effort to prevent a market reaction that could throw off the economy's momentum.

There is no question the Fed is approaching its goal of full employment after years battling the recession and its aftermath, so it will need to acknowledge that in the statement. Unemployment is at a six-year low of 5.8 per cent and monthly job growth has averaged more than 250,000 over the last six months.

More troubling is the elusiveness of the Fed's other goal of two per cent inflation. The Fed's preferred inflation measure stands at just 1.6 per cent and with global oil markets tanking, the dollar soaring, and the economies of Europe, Japan and China weakening, the threat is that it will slip further.

The clearest hint of the Fed's plans could come in policymakers' projections of how high rates should rise over the next few years.

Given US economic growth in the last two quarters was the strongest in more than a decade, policymakers will also probably nudge up their gross domestic product expectations for the next two years, and lower forecasts for inflation and unemployment. Reuters

Discussions
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ufoisreal

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2014-12-16 17:28

ufoisreal

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2014-12-16 17:40

ufoisreal

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2014-12-16 17:45

ufoisreal

JUST RAISE IT~すばらしい~すばらしい~すばらしい!!!!!すばらしい~すばらしい~すばらしい!!!!!すばらしい~すばらしい~すばらしい!!!!!すばらしい~すばらしい~すばらしい!!!!!すばらしい~すばらしい~すばらしい!!!!!

2014-12-16 18:19

ufoisreal

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2014-12-16 18:51

optimuss

too much emphasis is on us rate hike. yellen want to see super strong dollar? and all their manufacturing died? n the nation become a purely consuming creatures? just use usd to buy everything and cannot produce anything bcos dollar too strong. the rest of the world currency too weak to buy anything from them.


most american is still suffering.

2014-12-16 18:55

ufoisreal

WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!

2014-12-16 18:56

calvintaneng

Raise interest rate by Yelen?

You might be sorely disappointed

2014-12-16 18:56

ufoisreal

Post removed.Why?

2014-12-16 19:01

ufoisreal

WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!WE WANT RAISE!YELLEN! WE WANT RAISE!YELLEN!

2014-12-16 19:09

calvintaneng

Ufoisreal,

Please tell us why you want Yelen to raise interest rates?

2014-12-16 21:45

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