To hike or not to hike rates, gets a lot more complicated
A de-growth in US GDP is not great news for Janet Yellen. For her and the other governors of the US Federal Reserve, the decision to hike rates just gets a little more complicated. Wages and inflation are yet to pick up enough to justify a rate hike. And tapering export and GDP is only adding to the problem. There are three major challenges confronting Yellen and team.
Can US monetary policy diverge?
In practice it will be extremely difficult. Year 2008 saw a globally integrated monetary policy for the first time. Back then, most financial markets the world over were extremely fragile in the aftermath of Lehmann. A unified monetary policy was the only way out. Continue reading