Currency talk: December looking likely for US rate hike
Jason Walls and ASB's Tim Kelleher discuss the global currency market news on NBR Radio and on demand on MyNBR Radio.
A hike in US interest rates in December is looking more likely, after US Federal Reserve chairwoman Janet Yellen’s speech last week.
Mrs Yellen made the case for a rate hike by suggesting inflation will gradually move closer to the Fed’s target of roughly 2%.
“I anticipate that it will likely be appropriate to raise the target range for the federal funds rate some time later this year and to continue boosting short-term rates at a gradual pace thereafter as the labour market improves further and inflation moves back to our 2% objective,” she said during a speech.
ASB’s head of FX Tim Kelleher says December is the more likely option, as in October there won’t be a press conference and if rates are to shift, Ms Yellen will want to talk about it – rather than just putting out a release.
The market is currently pricing in a 41% chance of a December hike.
“The first hike is the most important one, the path after that is less important,” Mr Kelleher says.
World commodity prices are still under pressure, which has led to more pressure on commodity currencies, Mr Kelleher says.
“No one is forecasting a major bounce in commodity prices anytime soon.
“One would expect the currencies to uplift a little bit, an offset of the weaker commodity prices,” he says.
But he says the Aussie and the kiwi dollar should remain on a downward path.
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NBR Radio
Tue, 29 Sep 2015
Tue, 29 Sep 2015
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Currency talk: December looking likely for US rate hike
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