Following a speech held in Michigan by the President of the Chicago Federal Reserve Bank, Charles Evans, signs that the US Federal Reserve may increase rate in the coming weeks are starting to rear their heads.
This is most likely due to the steady increase in dollar value, reaching its highest price point in seven months this Tuesday, reaching 1.06$ against the euro, making a 0.1% increase since Monday this same week.
Add to this the data which shows how the amount of jobless claims in the US have decreased, bringing along a boost to manufacturing and factory activity, and the spike in rates become very likely. Taking into account that there is almost a 5% unemployment rate alongside a salary growth of 2.5% from last year, the US is sitting pretty good at the moment from an employment point of view, having the lowest unemployment rate since the year 2008.
Investors have been a bit cynical when it comes to the reports released by the Federal Reserve, due to their timing when it came to making rate hikes and their reports.
But the Federal Reserve Bank has urged investors to have patience when confronted with this supposed hike in rates, as the bank will attempt to make this process as gradual as possible in order to ensure a steady and balanced interest rate, even if this rate will be lower than last years.
The reality of this hike will be further cemented or debunked today, as the Chair of the Federal Reserve, Janet Yellen, will further discuss the matter at hand in order to clarify this occurrence for the anticipating investors. Another speech will be held this Thursday, in the preparation of the Federal Open Market Committee on the 16th of December.
If the dollar will be 1:1 with the euro until the end of this December, the likelihood of the Federal Reserve to increase rates is made almost null. But due to the fluctuation of the market we are currently seeing today, with China slowing down to an almost full stop due to their investigative moves made towards several brokerages across the Chinese market, there is still a high change of a hike in rates occurring.
The next moves from the Federal Reserve Bank will be extensively watched and studied upon in order to further conclude if their cautious means of hiking rates is viable enough in our current market or not.
Because the US Federal Reserve may increase rate in the coming weeks, policy makers will be extremely wary when attempting to enact or propose various policies in the coming months, an event which may lead to a slight stagnation of the market across the nation.