How much weight will the US Fed place on the global outlook to determine when to increase US rates

Perpetual Equity Investment Company

Perpetual Asset Management (Australia)

How much weight will the US Fed place on the global outlook to determine when to increase US rates? Globalisation has meant that the US economy is much more open with the exports and imports totaling 30% of GDP, relative to around 20% two decades ago. When looking globally, the US and China are about the only economies which can grow output through the domestic economy - all others are seeking to boost demand through trade and currency manipulation. However, if the US grows stronger in 2015 and the remainder of the world is dormant, how much will the US dollar be allowed to appreciate before it impacts US growth? In the end, US inflation remains well contained and as such the US Fed will be raising rates too late, rather than too early. But it will place an unusually large weight on the global picture, given its ability to impact the world's largest economy through the trade and financing channel. Rate hikes are still a way off, but they are coming sooner than current expectations.


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Perpetual Asset Management (Australia)

The Perpetual Equity Investment Company Limited is an ASX listed investment company offering investors access to a portfolio of predominantly high quality Australian and global listed securities, selected by Perpetual Investment Management Limited.

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