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USD: FOMC members continue to pile up on dovish comments - MUFG

FXStreet (Delhi) - Derek Halpenny, Research Analyst at MUFG, notes that after the comments from Governor Brainard firmly put her in the dovish camp by signalling a greater desire for delay, Governor Tarullo spoke yesterday and endorsed the view of Brainard stating explicitly that current conditions were not appropriate for an increase in the federal funds rate.

Key Quotes

“He appears unimpressed with the rate of growth and described the US and global economy as being in a “disinflationary environment”.”

“Still, while that’s two Governors from the FOMC who have come out in favour of holding off on a rate increase until 2016, the key FOMC Board members are still in the camp of a rate increase this year.”

“Yellen’s preference for a rate increase is surely crucial here and any change from her might swing the FOMC toward holding off. That I suppose highlights how balanced the decision is at present and in that sense the jobs report in November will be hugely important.”

“An acceleration in the pace of jobs growth and wage growth is really required in order to bring the markets back to the idea of a rate increase this year – without that happening it is difficult to envisage the dollar deriving support.”

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