Monday, May 11, 2015

US Fed will not increase rates right now

I personally don’t think the US Fed will increase rates as the economy in the last six months has been relatively weak. There isn’t much momentum. Secondly, given the US dollar strength until recently, I don’t think the Fed would wish to have a stronger dollar. The Fed has always remained data-dependent. If the data are not so favorable, they are not going to increase rates. Now they may increase rates symbolically, say by an eighth of a per cent, in the hope to gain some credibility. I think that the economy will continue to be weak, and therefore, no rate increase will happen this year.