FX MONETARY POLICIES
has been a change to something known as
the ‘neutral rate’. This
can be described as the ‘long-term’ interest rate target; an optimal level for sustainable economic performance. At the
Federal Reserve lowered the ‘neutral rate’ from 3% to 2.75%.
Te headline
news from the S ep t em b e r meeting
relates
to the tapering of the Federal R ese r v e’ s balance
sheet.
Aſter the 2008 global financial crisis, the Federal Reserve expanded
its
portfolio through a bond buying pr o g ram m e ( c om m on l y known as q ua n ti t a ti v e easing). When those
bonds matured, the
purchased Federal
September meeting, the In addition to the specifics of
stimulus. However, Fed chair Janet Yellen did state that the bond buying programme could be utilised again should there be another severe economic downturn.
thought that President Trump is open to reappointing Yellen, but that he is also considering other alternatives.
Janet Yellen stated that the bond buying programme could be utilised again should there be another severe economic downturn
Reserve would reinvest the principal payments into purchasing more bonds. From October 2017, the Federal Reserve will rollback the amounts that are reinvested by $10 billion per quarter. Tis is a significant move - and shows that the Federal Reserve thinks that the US economy is resilient enough to perform consistently without this
10 FX TRADER MAGAZINE October - December 2017
monetary policy, Janet Yellen was also asked about her own future at the Federal Reserve. Her term ends in February 2018 - and at this moment in time, it’s not clear who President Trump will nominate to lead the central bank. At her press conference, Janet Yellen was reluctant to project what the future might hold for her beyond February 2018. It’s
In my view, the Federal Reserve is pretty much sticking to its script in 2017. Te volatility we’ve seen in the US dollar has actually stemmed from the lack of progress in relation to fiscal policy. Much of President Trump’s first- year agenda has yet to come to fruition. Exa m p les include the pr op o s e d American Health Act and taxation reform. Further difficulties in implement ing fiscal policy could lead to short- term trading opportunities on the US dollar.
Bank of Japan Meeting
Te Bank of Japan held its meeting over the 20th and 21st of September. Remember, the Bank of Japan is uniquely placed amongst other major central banks. By continuing its aggressive quantitative easing programme, its monetary policy divergence is extreme with other peers.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70
