Friday, September 2, 2016

6 Reasons that support a rate hike from the Fed – The Economist

The meeting of the Federal Reserve of the United States the next 20-21 September is the key event in terms refers monetary policy this month.

the market just think about something else: whether the Federal Reserve (Fed) US will rise or interest rates this year and when they decide to take the plunge. The next FOMC meeting on 20-21 September is the key event in terms of monetary policy is concerned this month. A month in which no less than are scheduled 30 meetings of major central banks, recalls today in a report Christopher Dembik, financial analyst at Saxo Bank.

The expert notes that “there is clearly a chance of a rise in interest rates, but the final decision of the central bank depends on the data of August. ” Just today has been known official US employment report, according to which 151,000 new nonfarm jobs were created, well below the 180,000 expected by the consensus. This would delay the time the decision to increase the price of money, which some predicted even for this month.

From Link Securities say that the reference today “will determine whether the Fed is not decided or up types and if even it does in September, employment being one of the variables that most influences the decisions of the top US monetary authority “. And they point that “while it is true that the employment data August is usually somewhat erratic, to be a month very conditioned by the summer holidays in the country, it is also true that if the labor market continues to show high strength the probability that the Fed will take the window that opens and act we would increase substantially “hold at Link Securities.

As noted in a recent report John Bailer, of BNY Mellon,” although now rates have remained, the US economy is strengthening, which will result in higher rates in 2016 and increased strength for values ​​”. However, employment data on Friday notes that the US economy suffers more than you would expect.

Analysts believe that the Fed will not run before you walk and a possible-and not as likely in the short-term rise in rates will not be aggressive governing. “This means that the economy is doing well but the Fed will not make the mistake to raise rates rapidly endangering the weak economic recovery” point in Unicorp Heritage. The central bank headed by Janet Yellen executed the first rate hike in a decade last December when it increased by 0.25%, ending an era of ultra-expansionary policy.

For the analyst Saxo Bank, Christopher Dembik, these 6 reasons that could lead the Fed to normalize monetary policy:

1. The labor market slowdown seen last spring seems to be temporary. This is justified that the latest economic indicators are encouraging.

2. The official unemployment rate, set at 4.9%, is close to the NAIRU. This is, the economy is in balance and inflation pressure or rises nor falls.

3. The increase in earnings per hour worked, which are close to being monitored by the Fed, it has accelerated more than expected.

4. Financial stress rates are falling.

5. Economic forecasts indicate that momentum is strengthening. The forecast Atlanta Fed now GDP is currently 3.5% in the third quarter.

6. Investors need to note that the Fed is in a difficult position. The central bank needs to raise interest rates before it is too late and that the United States into an economic slowdown, says Christopher Dembik.

“A quick recovery in employment, better economic data for the US, signs of inflation and minimal impact due to brexit would be reason for the Federal Reserve to raise rates soon, “sums up John Bailer.

the employment data has not met expectations, as happened yesterday with the He crafted ISM, which returns to avert the probability that the Fed will raise rates in the remainder of the year. The Spanish stock market has reacted uploaded to this scenario

fondos@eleconomista.com.mx

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