Fed Holds on Raising Rates, Fears Rising Dollar
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By Tom Luongo
The Federal Reserve’s Open Market Committee chose not to raise interest rates six days out from an election. The statement was also clear as mud on whether it would raise rates at the December meeting.
Bond traders, however, are very clear in their interpretations of the statement; boosting the odds of a December rate hike to near 80%.
There is deep division within the FOMC between those focused on domestic needs — served by higher rates — and those playing at being Central Bank of the World. The Fed has held back on raising rates all year on fears of sparking a massive rally in the dollar.
Ignore talk of a strengthening U.S. economy. Most of the statistics are noise, if outright fabrications. The problems the Fed faces are tied up with consequences of nearly eight years of zero-bound interest rates destroying risk-pricing the world over.
And now, those imbalances threaten a massive dollar rally.
From Rate Hike to Global Recession
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