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15 May 2015
Fed see headwind impacts temporary - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that many Fed officials, including the leadership, recognized the headwinds facing the US economy but anticipated that the impact was temporary.
Key Quotes:
These included the weakness in oil prices (dampening headline inflation with some albeit limited spillover into the core rate) and the strength of the dollar. The dollar has fallen against all the major currencies since the March FOMC meeting, save the New Zealand dollar (owing to a shift in expectations toward an RBNZ rate cut as early as next month). Oil prices have also rebounded. The price of light sweet crude oil has risen around 28% since the March FOMC meeting.
Some feared that the weakness in other major economies would drag the US economy down and that this would deter the Fedfrom hiking. Instead, lower interest rates, lower oil, and currency depreciation appears to have bolstered the eurozone economy and Japan. Both of them grew faster than the US in Q1 and may do it again in Q2.
Key Quotes:
These included the weakness in oil prices (dampening headline inflation with some albeit limited spillover into the core rate) and the strength of the dollar. The dollar has fallen against all the major currencies since the March FOMC meeting, save the New Zealand dollar (owing to a shift in expectations toward an RBNZ rate cut as early as next month). Oil prices have also rebounded. The price of light sweet crude oil has risen around 28% since the March FOMC meeting.
Some feared that the weakness in other major economies would drag the US economy down and that this would deter the Fedfrom hiking. Instead, lower interest rates, lower oil, and currency depreciation appears to have bolstered the eurozone economy and Japan. Both of them grew faster than the US in Q1 and may do it again in Q2.