GLOBAL: FOMC: 3-27-06 to 3-28-06
The world (at least financial) is waiting with bated breath to see the outcome of Chairman Bernake's first FOMC meeting. The markets seem to be pricing in a .25% rise in the FFR, but what'll be of more consequence is what signal if any there is for how hawkish the FED will be (it'll hit 5.25% but likely the axe will be whether it goes to 5.5%).
This is the beginning of the central bank ratcheting which will soon be echoed by the ECB and BOJ. The BOJ will likely want to move sooner rather than later, lest the dollar strengthen too much against the Yen and push the Japanese CPI back under. Though likely 2 ratchets for the BOJ will suffice to keep them around 122-125.
Does this signal the end of the global liquidity glut? Likely not before year end as China's savings propensity will likely not reverse enough despite the Chinese Central Goverment's attempt to stimulate domestic demand. A key concurrent indicator to watch for is commodity prices (namely oil prices). If the WTI price stays above 65 then we could see some momentum burn off.
This is the beginning of the central bank ratcheting which will soon be echoed by the ECB and BOJ. The BOJ will likely want to move sooner rather than later, lest the dollar strengthen too much against the Yen and push the Japanese CPI back under. Though likely 2 ratchets for the BOJ will suffice to keep them around 122-125.
Does this signal the end of the global liquidity glut? Likely not before year end as China's savings propensity will likely not reverse enough despite the Chinese Central Goverment's attempt to stimulate domestic demand. A key concurrent indicator to watch for is commodity prices (namely oil prices). If the WTI price stays above 65 then we could see some momentum burn off.
posted by howa at
3/27/2006
