User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Thursday October 20, 2005 - 13:49:07 GMT

Share This Story:
| | Email

No US interest rate increases in 2006?

The Fed will remain nervous over inflation trends in the short term with increased fears that the jump in energy prices seen in September will cause secondary price pressures. There will certainly be the risk of a wider inflation increase over the next few months, although the most likely outcome is that any increase will be measured.

US growth conditions are liable to deteriorate at least to some extent as consumer spending growth falters even though this will be offset by reconstruction work. The Fed would then face a much tougher task in balancing the needs of inflation and growth, especially if core inflation measures remain under control. There could also be political constraints to aggressive tightening, particularly with a new Fed chairman set to take office next year.

There is a very high probability of a further interest rate increase at the beginning of November and there is also at least a 50% chance of a tightening in December. At that point, however, the tightening is likely to be put on hold to assess economic developments. Indeed, there is a good chance that interest rates will not actually be increased during 2006.

Short-term inflation fears

The Federal Reserve has increased US short-term interest rates to 3.75% from a low of 1.0% in 2004 and the debate on where rates will peak will be an important market focus in the short term.

Headline consumer prices rose 1.2% in September with the annual inflation rate pushing to a 15-year high of 4.9%. Producer prices also rose sharply with a 1.9% monthly increase for September, the biggest monthly increase for 20 years.

Core inflation indicators have remained under control with the underlying consumer price index increase held to 0.1% for September while the core PPI increase for the month was 0.3%. The core annual CPI increase fell to 2.0% from 2.2% and the Fedís preferred measures of inflation has held below 2.0% over the past few months. The low level of core inflation will offer near-term relief for the Federal Reserve, but the central bank will need to remain on high alert in the short term. Although the immediate evidence has been encouraging, there will still fears that the jump in energy and raw material costs will gradually feed through into wider inflationary pressure over the next few months. In this context, there will be some concerns over the Fedís Beige Book which reported that companies were having some success in pushing price increases on to customers.

The Federal Reserve has increased interest rates at the last 11 consecutive FOMC meetings and there is a strong probability that the central bank will tighten again at the beginning of November. Futures markets are looking for another rate increase in December and have priced in a further increase to 4.25% while there are market expectations that rates will increase to 5.0% or higher during the course of 2006.

Growth could be at risk

The Federal Reserve, however, has a dual mandate of maintaining price stability and the highest possible level of employment. The Fed will, therefore, be placed in a very difficult situation if there is a rise in underlying inflation at the same time as a deteriorating economy as there will be conflicting pressures on the Fed.

The labour market remained strong in the third quarter and the unemployment level is low at 5.1% which will support near-term optimism. The growth outlook will remain very important in the short term and there is likely to be unease over consumer spending levels, especially as the savings rate is already at a very low level. In this environment, any negative income shock will quickly result in lower spending growth.

Retail sales rose 0.2% in September and there was an underlying increase of 1.1% excluding auto sales, but spending was artificially inflated by the sharp rise in gasoline prices. Consumer confidence levels have continued to deteriorate over the past few weeks with little evidence of a recovery from the hurricane Katrina shock. Consumer confidence levels do not have a strong predictive track record for consumer spending trends, but there will still be concern over underlying conditions, especially if high energy prices are sustained. There will be a drop in real disposable household income which will undermine the spending outlook.

In this context, the housing sector will remain very important for the US economy and interest rates over the next few months. If prices hold firm, there will be a much reduced risk of a drop in household spending. Conversely, any drop in prices would increase the threat to consumer spending. Overall, the risks to consumer spending will tend to increase, especially as rising long-term interest rates will push up mortgage rates. Monetary policy also acts with a lag and the full impact of the tightening already sanctioned will not be felt until next year. Also, the evidence of underlying inflation will not be resolved for the next few months, increasing the risk of policy mistakes next year.

The economy will receive a boost from re-construction following the hurricanes this year. Overall, however, there are likely to be significant constraints on Fed tightening from early in 2006.

Fed uncertainty will increase

Additional uncertainty over Fed policy is likely to be created early in 2006 by the departure of chairman Greenspan after 18 years in charge. The Bush administration has not yet nominated a successor to Greenspan and, whoever is nominated, there is likely to be slightly more caution over policy in the short term. Bush has pledged a non-political appointment, but the new chairman is still likely to be more reluctant to sanction further rate increases.

Although difficult to estimate, a neutral level for monetary policy is likely to be when short-term interest rates are within a 3.5-5.5% range and the Fed will probably prefer to keep rates in the lower half of the projected band given the underlying stresses within the economy. There is, therefore, likely to be caution in pushing rates above 4.5%.


Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Tue 17 July 2018
AA 08:30 GB- Employment
A 13:15 US- Industrial Production
AA 14:00 US-Powell Testimony
Wed 18 July 2018
AA 08:30 GB- CPI
A 12:30 US- Housing Starts/Permits
AA 14:00 US-Powell Testimony
Thu 19 July 2018
AA 1:30 AU- Employment
AA 08:30 GB- Retail Sales
A 14:30 US- EIA Crude
A 12:30 US- Weekly Jobless
Fri 20 Jun 2018
A 12:30 CA- CPI/Retail Sales

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105