Comments from George Goncalves , head of interest-rate strategy at Nomura Holdings
- "If they go in September, it will be the most dovish hike they have ever administered"
- "They will lower the dots and they will say this is really just operational to get off of zero"
On inflation, Gonclaves added:
- "We've had weak commodities, weak inflation, mixed data"
- "Yes the job market's good, but create as many jobs as you want, it's not creating inflation"
For those tipping a September rate hike from the Federal Reserve (like me), this lack of inflation is a thorn in the side. You'll recall the Fed has said they have 2 criteria for a hike,
- 'Some' improvement in the labour market
(Which we are getting)
- And they want to be "reasonably confident" inflation will rise to their 2% annual target
(Which is much more difficult to see)
I posted during the week on a view that with little sign of inflation, there ain't gonna be a hike. It's a good point.
The FOMC wants to hike, I believe. They want to get off the 'emergency' level at zero ... but it's a tough argument to make that's it two criteria have been met.