FOMC review: The US labour market is now the only thing worth watching

The inflation rate will increase markedly above 2% but the Fed considers it transitory due to bottlenecks and base-effects. The only true inflation stems from the labour market (according to the Fed), why the labour market is now the one to watch. The Fed sounded more upbeat on economic projections (again) but also kept referring to the fact that they want to see actual progress and not forecasted progress before changing anything in the policy framework. They also need to see substantial further progress before moving towards tapering, but we are kept clearly in the dark on what that means. Our views: Inflation … (full story)

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