020 7898 0500Clearly the Federal Reserve is keen to “return to normality” post the 2008 financial crisis. This means increasing interest rates and stopping their program of quantitative easing (QE). The announcement following yesterday’s meeting was light on information as to when the next interest rate rise would be but stated that they would start to reduce their QE program relatively soon. This could be as early as their next meeting in September.
The markets took the lack of detail on interest rates as a negative and we have seen the dollar weaken significantly.
Two weak points dominate the US economy at the moment which has quashed rate hike speculation: inflation and lower consumer confidence. The markets will read Yellen’s statement closely for how she proposes to deal with both of these.
Today sees US durable goods out at 1:30pm UK time, alongside unemployment claims. The market will watch to see if the recent trend of slower US data will continue.
