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- Bullard/St. Louis FED-The Central bank will likely reduce liquidity and the 3rd rise of Interest rates in question
Bullard/St. Louis FED-The Central bank will likely reduce liquidity and the 3rd rise of Interest rates in question
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Loading...Bullard from FED said that at the moment the Central bank, does not have cause to raise the rates very quickly, but they will most likely increase slowly. The market continue to factor in only 2 rate hikes, as the first is already a fact. There is a high probability that FED will increase rate only one more time this year and that might be in December 2017.
Bullard also said that FED may start to decrease the size of its balance sheet, but even that would be a slow process. Furthermore, this decrease of the balance sheet might be in place of the rising rates, for the FED to decrease the balance sheet and not increase rates as much. This might be negative for the USD, but it may be even more negative for the indices, as this process will mean that QE will practically stopped. In other words the flow if cheap money that are invested in stocks will stop as well.
The member of the FED continued with the fact that the economy is actually not as strong as they thought, with grow of only 2% and that the rate of jobs creation might have reached a peak and now it might decrease.
If FED start to reduce its $4.45 bln. and it will draw down liquidity and the 3rd rise in the rates remains in question.
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