Forex Strategy Video: Look at the Rate Decision from the Fed's Perspective
• The eventual rise in US rates will no doubt have an impact on local and global capital markets
• While Fed policy moves will reverberate through the financial system, they can't account for all casualties
• What balance will the central bank strike between its 'dual mandate' and global investment in its decision?
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Could the Fed really hike rates when it may potentially send equity markets reeling? Sure. More than a few of the central bank's rank have stated in the past that policy is not dictated by the capital markets and the returns of its participants. The central bank maintains a dual mandate that targets employment and inflation trends to offer a discreet yet comprehensive assessment of the economy's and financial system's health. If the Fed were to attribute equal importance to every party and sector when deliberating policy, it would never move. Never. While there are certainly strong arguments to be made for the Fed holding rates as well as hiking, it is important to analyze their future movements from their own perspective - that of a central bank rather than an investor worried about a portfolio, economist that lives by a specific brand of economics or pundit that wants to spot the unexpected. We discuss stripping impressions from the FOMC's decision ahead.
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