Tuesday March 8, 2016 - 23:36:16 GMT
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Opinion: Time for the FOMC to Show Some Guts
Does the market really believe the economy is that fragile that one rate hike per year of 25bps is all it can stand? Regardless of our personal opinions over the strength of the economy, the Fed decided to raise in Dec 15 and nothing they have said since has said it was a one and done decision.
I think the Feds made a huge mistake previously by giving the market many months to agonise over every rate meeting towards first rate hike so much in the end the FOMC was forced to delay it. Whether you call it preparation, the lubricious term transparency or just "feet of clay" the glacial process was the cause of huge market perpetual speculation. In a world driven by algos, milliseconds and key words, six months of nannying postured indecision just doesn't cut it.
For the good of the market I think the Fed need a lot less outward public displays of confusion due to the modern desire to confess and explain the obvious (data dependent!! When have they not been??) and nail their colours to a mast. The market knows after decades of Central bank puts that if things go wrong they will be bailed out. Stating this to the financial economy at every press conference, interview or paper just underscores how conflicted this FOMC really is.
I think they should get on with it. They can always stop but to stop after one rate hike would be an absolute catastrophic signal.
The above is a post from a highly respected member on the GVI Forex Forum member.
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