Hamilton Crawford: Fed Policymakers Turn Dovish on Inflation

Hamilton Crawford: The likelihood of further US interest rate hikes dim as inflation data weakens

Federal Reserve

Hamilton Crawford: The US Federal Reserve is growing more dovish about the prospects of another rate hike this year in the face of weakening inflation data. Three policymakers at the US central bank, the world’s most powerful, appeared to fall into line with market consensus which has not priced in another rate increase this year.

One voting member suggested that it was the Fed’s rates hike up until now that were responsible for the soft inflation data while two others advocated patience in the light of continually developing signals from the world.

Inflation has been flat or falling this year even though jobs growth has remained robust but concerns are mounting that the jobs recovery may be running out of steam after the Bureau of Labor Statistics non-farm payrolls data missed estimates and previous months’ data were revised downwards.

A senior market strategist at the Shanghai-based investment house, Hamilton Crawford explained that the likelihood of another rate hike in 2017 had dwindled because there was concern that another 25 basis points on the Fed funds rate could choke off growth and place undue stress on borrowers - both individual and corporate.

During a speech made at the Economic Club of New York, Lael Brainard, a FOMC voting member, suggested that the fed should publicize the fact that it would be willing to tolerate an overshoot of its official 2 percent target. She has been firmly against tightening policy fearing that a repeat of the Fed’s mistakes that led to an extended Great Depression during the 1930s.

According to Hamilton Crawford, the central bank will pause rate hikes until the first quarter of 2018.

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Source: Hamilton Crawford


Categories: Economy, Federal Government, Governmental Banking

Tags: Federal Reserve, Hamilton Crawford, HamiltonCrawford, Inflation

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