Why will the Fed and the BoE not raise rates? A great article on today's FT

[B]Hello traders!

Stephen King (no, not THAT Stephen King, but HSBC Group’s chief economist) wrote a great article on today’s

Financial Times, trying to dig deep on why Carney and Yellen are like ‘rabbit in the headlights’, unable to move

on nominal interest rates for their respective banks:

Interest rates: central bankers’ dilemma on both sides of the Atlantic | The Exchange

[B]A good read…


Interesting times ahead. Good read. Thanks for the article.

I have been saying/writing for quite some time that there won’t be a hike by the US Fed. I do think that the BoE will move next year and that 2016 will end with an interest rate of 0.75%, but I also think that the APT will need to be removed first. I think the US is closer to QE4 than a hike in interest rates.

Fed hike & US market Fed to start its rate normalization program in early 2016, and not in September-December. hike in September to be minimal, and not affect the US markets to a higher extend.
BoE might beat Fed in the rate-normalization race. Both Bank of England and the Fed remain in the race to begin race normalization. Kelly believes that UK remains in a much better position to hike rates than the Fed, and by August we might see a 6-3 split in votes in the BoE MPC. - See more at: BoE might beat Fed for the hike, Gold short squeeze ahead, EUR/USD to 1.12? - Tip TV

Great comments, everyone… Sadly, none of us is inside the FOMC or MPC, or in Yellen’s or Carney’s heads (nor would you want to be, in case your head might explode under the sudden weight of their anxiety) … Seriously, we are surely on the cusp of a sentiment turn, and we can all agree on that general assumption, although what this may mean for retail traders like us, let alone how we may position for it across the various instruments (i.e. different Forex pairs), remains the unknown quantity for now…

Yellin delaying rate hike
lack of confidence in Yellen’s proposal of the September rate hike, and that when looking around everyone can see that the world is in turmoil. He believes this is the same as Carney and the UK rates, despite the UK being in a better position than the US to raise rates, maintains that the UK will not act ahead of the US. -

QE4!!! QE4!!! QE4!!! Here goes, the US has 18 Trillion in debt, what happens when you run out of other people’s money?! Devaluation!

FOMC meeting: Eyes on Williams and Lacker’s stance
With the Greece and China fiasco, I believe that the focus should be on how the fed describes the risks to the US economy. Any dissent by Fed members Williams and Lacker might also be the key view from the FOMC meeting, as both the members have been rooting for rate hike in the US this year. Any divergence seen by them will further add uncertainty to the US rate hike outlook. Fed should be thinking about a September rate hike, as December won’t be a likely lift-off date. Markets are pricing in a 50% chance of a September rate hike

No particular update today from the Fed…

A strikingly neutral tone, which, in turn, means no change from its ‘hawkish’ stance in aiming for

not one but two rate hikes [I]by the end of 2015[/I].

The US GDP data tomorrow may be something that moves the market more than what the FOMC

language did this evening.