The Fed doesn't understand the causes of inflation: Larry Kudlow

Adjust Comment Print

Speaking at the National Association for Business Economics, Federal Reserve chair Janet Yellen said: "It would be imprudent to keep monetary policy on hold until inflation is back to 2%". Last week, it maintained its forecast of three quarter-point rate hikes next year, but cut its projection from three to two increases in 2019, lifting the rate to 2.9% by 2020.

The US dollar index was up by 0.5% at 93.08 at 8:31 a.m. ET. "The impact of a successfully implemented (tax overhaul) plan would be far-reaching with President Trump placing a key focus on bringing back funds from USA firms "parked overseas".

The US dollar moved higher after the Fed September meeting where the policy committee discussed the strengthening US economy and the prospect of raising rates.

As the U.S. dollar rises, gold futures will usually fall, as dollar-priced gold becomes more expensive for holders of other currencies. The federal funds rate, the interest rate the central bank charges banks on overnight loans, now sits in a range between one and one-and-one-quarter percent.

Investors are also looking to a tax reform plan due to be announced on Wednesday by U.S. President Donald Trump and fellow Republicans that could boost growth and inflation.

GOP's Latest ACA Health Insurance Repeal Plan Appears Dead
Ms Collins, a moderate Republican from ME , said she objected to the Graham-Cassidy bill's sweeping cut in funding to Medicaid . Senate Republicans will not vote on Graham-Cassidy, a GOP health care replacement for the Affordable Care Act (ACA).

Bostic did not close the door on the need for another rate hike this year, repeating, as have several of his colleagues, that he is keeping an "open mind" about a December hike hoping the inflation lull passes. NAR said its pending home sales index plunged by 2.6% to 106.3 in August from 109.1 in July. Addresses from central bankers in Canada, the United Kingdom and the USA continue a busy week for policy setters, while geopolitical concerns linger.

Among other precious metals, silver rose 0.3% to $16.82 per ounce.

-The MSCI Emerging Market index sank 0.8 percent to the lowest in more than a month.

Against other major currencies, the ringgit was mostly lower except against the Japanese Yen as it rose to 3.7493/7539 this morning from 3.7649/7686 on Tuesday. The press conference supported the dollar, which managed to rise by nearly half a percent against the euro, reaching levels of 1.1756 euros per dollar. China's Shanghai Composite Index was almost flat at 3,345.12. The Fed's prior Houdini history of wiggling out of prior guidance to raise rates obviously is reason for skepticism, and this skepticism is clearly expressed in fed funds futures trading. ICE Brent crude for November settlement fell 87 cents, or 1.5%, to $58.15 a barrel. "Investment spending should also benefit from a better worldwide outlook and improvement in USA trade competitiveness caused by the dollar's recent weakness".

Comments