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Fed speakers giving mixed signals about timing of lift-off – Deutsche Bank

FXStreet (Delhi) – Jim Reid, Research Analyst at Deutsche Bank, notes that yesterday the Fed speakers gave contrasting statements regarding the timing of lift-off with Lockhart supporting the early lift-off bets while Evans pointing towards a mid-2016 rate hike bets.

Key Quotes

“Lockhart emphasised that October is ‘live’ and that he is comforted by the reduction in volatility in markets recently. However a large part of this is due to the Fed being priced out of the market until next Spring so the argument is a bit circular.”

“Evans confirmed his view that in his mind liftoff in mid-2016 is more appropriate, while Fed Governor Brainard added to this more dovish stance and highlighted the clear uncertainty at present, saying that ‘I view the risks to the economic outlook as tilted to the downside’ and that ‘the downside risks make a strong case for continuing to carefully nurture the US recovery and argue against prematurely taking away the support that has been so critical to its vitality’.”

“The view of the Fed delaying was shared by China’s Finance Minister Lou yesterday, quoted in the Chinese press as saying that the Fed ‘isn’t at the point of raising rates yet and under its global responsibilities it can’t raise rates’.”

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