Unhedged
Central bankers do nothing. Markets respond
Jun 13, 2024
Chris Giles, The FT’s economics commentator, joins the host to discuss the recent actions of the Federal Reserve and the market's response. They delve into central bankers' challenges, rate arbitrage, US election impact, and analyze the relationship between currency fluctuations and inflation in the Eurozone.
17:20
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Quick takeaways
- The Federal Reserve's recent ambiguity in interest rate forecasting reflects internal divisions, with some members leaning towards two cuts and others suggesting only one, highlighting the challenge of accurately predicting policy adjustments.
- The complexity of forecasting inflation post-pandemic has intensified due to evolving supply chain disruptions and changing consumption patterns, making inflation projections more challenging for central banks.
Deep dives
The Fed's Uncertainty on Rate Cuts
The markets' expectations of interest rate cuts by the Federal Reserve have shifted from initially anticipating six cuts to now possibly one or two. The Fed's recent ambiguity in forecasting reflects internal divisions, with some members leaning towards two cuts and others suggesting only one. The dynamic economic data and uncertainty in interpreting signals indicate the potential for zero cuts, highlighting the challenge of accurately predicting policy adjustments.
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