“Daft” is how outgoing Bank of England policymaker David Miles described the idea that Britain’s central bank would have to wait for the U.S. Federal Reserve before hiking interest rates.
Perhaps the most notable aspect of the Federal Reserve’s April statement is its brevity: at just 560 words, it’s the shortest post-Fed-meeting statement since October 2012. In saying less about its much-anticipated first interest-rate hike, the Fed is nudging markets to pay attention to other stuff. Like, for instance, the April jobs report next Friday, and the May jobs report one month later. “The Fed is data dependent,” says Eaton Vance portfolio manager Eric Stein. “They’d like to get to a world where the market will react more to numbers rather than Fed meetings and statements.”
The U.S. Federal Reserve may find it even more tough to raise interest rates as the year wears on if dwindling expectations for growth are any guide.
Expectations may have been pushed to later this year for when the U.S. Federal Reserve will hike interest rates, but a repeat of another steep sell-off in emerging market stocks appears unlikely as much has already been priced in - and because of the stronger dollar.
from Morning Bid with David Gaffen:
So now what? The biggest surprise from the Federal Reserve's statement on Wednesday was that the committee argued for more improvement in the labor market before it would feel comfortable with starting to raise interest rates.
Fed Chair Janet Yellen may signal later today that she is no longer patient about when to consider raising rates but any eventual hike is likely to come after June, judging by how many key economic reports so far this year have undercut expectations.