U.S. Federal Reserve Policy Preview

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GVI Dollar Outlook

UNITED STATES

GVI U.S. Feberal Reserve Bank Policy Meeting Preview

Decision: June 25 at 19:15 GMT.
Fed Funds rate: 2.00%
Expected Decision: No rate change
Short-term market sentiment contnues to exert a strong infuence on Fed policy decisions. On Wednesday April 30, the central bank cut its funds target by -25bps to 2.00%. The policy statement disappointed the markets because it did not clearly signal a policy pause. Odds are the bank saw no reasons to allow the market to bully them into a policy posture before interim data are seen. Future policy decisions now will be data-dependent.

FEDERAL RESERVE Policy Objective: The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

uscpi

The chart above shows year/year core PCE for the U.S. relative to its its reported "comfort zone for this key price index. Headline and Core CPI figures are also shown.

ezcpi

The above monthly U.S. employment chart is included because its the most closely followed data release each month, and because one of the objectives of the Fed is to maximize employment.

s-t rates

The chart above shows the current three month libor rate, the current Fed funds target and where the futures markets are currently trading three month rates for the specified periods in the future. The chart also includes comparisons of where these futures rates were trading most recently, a week ago and four weeks ago. The chart provides a view on where the markets feel U.S. interest rates are headed.

The chart above shows the U.S. Fed Funds rate target, three month libor, and two- and ten-year bond yields over the past twelve months.

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