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The US Central Bank, the Fed in the dilemma

When the U.S. Central Bank chief Jerome Powell announced tonight the latest interest rate decision from the Central Bank, are in serious hours behind him. The pressure on the Fed to change its interest rate policy, is growing. From the outside, but also from the inside.

The "master plan" the guardian of the currency, was actually a small interest rate move in December and then a further three increases in the benchmark interest rate levels in the coming year. After the fourth interest-rate increase this year, the U.S. is likely to exit its key interest rate, then from Wednesday on, in the range of 2.25 to 2.50 percent in a turbulent year 2018. Meanwhile, the majority of the interest-rate-experts assumes that there will be in the coming year, only two Turns of the interest rate screw, namely, in March and in June.

New information on the Interest rate projections of the Central Bank, the stuff about the financial markets on Wednesday evening, German time, once again, vigorously shake. The interest break is coming, maybe even sooner than we thought? And how Powell and his colleagues estimate that the open market Committee of the Fed, the economic situation in the United States?

with the President

against the wind, even for the widely expected interest rate move comes as US President Donald Trump in the usual vehemence: It was "incredible" that the Fed is considering such a step "at all," wrote Trump on Monday in the short message service Twitter. On Tuesday, he did the same with the statement that the Fed may "no further errors" commit. As arguments against an increase in interest rates, the U.S. President proclaimed that the Dollar was "very strong", there was "virtually no Inflation" and "the world around us in the air flying". As an example of international crises, Trump stated that "Paris is burning". He also pointed to the sharp slowdown in the growth of the Chinese economy.

if Trump meets with his reasoning at the core of the problem, are likely to his Remarks the pressure on the Fed and their - once of Trump appointed chief Jerome Powell will increase significantly. The Central bankers are now almost forced to, at least, the December interest rate increase as planned; even alone, to show the public that the Central Bank can withstand the overt pressure from the White house.

investors are nervous

there are also internally quite against votes for an official interest rate increase in line. The head of the Fed branch of St. Louis, James Bullard, believe that the imaginary "neutral Zone" has already been crossed, and the interest of the economy inhibits. Currently, the policy rate is 2.0 to 2.25 per cent, just below this neutral level, the economy is neither stimulated nor slowed down. Also, the Fed-Director Lael Brainard believes the Central Bank is "at the crossroads". She fears that investors could increasingly be nervous.

structure of interest rates U.S. government bonds

If the bond market is quaking

The nervousness may be justified, if you look at the "inverse yield curve", which seems to be currently in the bond market. In short-term interest-bearing investments throw off more yield than longer-dated. This is considered to be a potential warning signal for the economy, and the increased recession risks. In the past, such interest rate curve of an actual recession with regularity is gone. According to statistics, the Bloomberg news Agency, the recessions of the past decades have occurred then, however, with a delay of one to two years. Whether the Fed sees the time has come to occur so quickly on the interest rate brake, learn the financial markets in the evening.

source: Atlas |USA |New York All eyes in the direction of the Fed's Disappointing stock market debut in Tokyo Goldman Fresenius ranks highly as a ...

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