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Bfs Forex: The market believed the pace of the Fed's rate hike, but the Fed was divided

Beijing time on Thursday (Jan. 4) released by the federal reserve meeting minutes in December, according to federal reserve officials to raise interest rates three times in 2018 One camp is dove camp, think too radical to raise interest rates three times in 2018 A more hawkish camp, they think interest rates three times in 2018 pace is too slow.

In December 2017, the Federal Reserve is expected to raise interest rates three times in 2018. However, Beijing time on Thursday (January 4) Federal Reserve announced the minutes of the December meeting showed that Fed officials divided the rate hike in 2018 three times.

The minutes of the meeting showed that the two camps were roughly equal, and that they were undesirability of raising rates three times in 2018, for a very different reason.

One camp is dove camp, think too radical to raise interest rates three times in 2018 These officials argue that raising interest rates three times or hinder the inflation rate to rise to the fed's target of 2% They said that they do not believe that interest rates before no longer loose or promote growth level there is still room for further upward.

A more hawkish camp, they think interest rates three times in 2018 pace is too slow, the officials said since the fed to raise interest rates by the end of 2015, America's fiscal situation does not tighten, continued low interest rates will lead to financial instability.

Jefferies group (Jefferies LLC) Ward McCarthy, chief financial economist said Ward McCarthy, a hawkish fed officials continue to support rates gradually normalization, and doves officials is for normalization of interest rates is an abomination to the pessimist, they will take any straw can slow the process.

Ironically, markets are beginning to accept expectations that the Federal Reserve will raise interest rates three times in 2018, while Fed officials do not seem to be completely convinced of their own predictions.

Investors have already expected that the Fed will be able to raise interest rates by 70% at the March 2018 meeting, and the chances of the Federal Reserve raising interest rates again will be slightly higher by December.

Meeting minutes also showed that fed officials expect the U.S. tax only a modest impact on the us economy, fed officials said the modest raised us economic growth expectations, because the final tax reform bill than expected.

Most fed officials believe that us inflation will gradually return to the fed's 2 per cent target, but a few other officials believe the pace of inflation or continued weakness.

A 12-month inflation rate based on the fed's preferred core PCE index is 1.5 per cent, below the fed's 2 per cent target.

Fed officials are lukewarm about us tax reform, arguing that tax reform will boost capital spending properly, but that the economic boost is uncertain.

At its December 2017 meeting, the fed voted 7-2 to raise rates by 25 basis points to 1.25 per cent to 1.5 per cent, the third move in a year that has been widely predicted.

Since 2015, started in December 2008, the first increase since the financial crisis, the fed began a slow monetary policy normalization process, has been raising interest rates five times, and in October 2017 began to shrink their balance sheets.

 


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