There's a good chance that the Fed could raise rates as early as June
Contrary to the general market reaction following the United States Federal Reserve policy meeting last week, we still feel there's a good chance that the Fed could raise rates as early as June. The longer the Fed delays in raising rates, moreover, the greater the risk of asset price bubbles developing - which the Bank of International Settlements has recently suggested could be a greater economic risk than price deflation. Markets have been blindsided by a modest downgrade to the US economic growth outlook among Fed members, and a scaling back in their expectation for how fast the Federal funds rate will rise over the next year or so. Against this, however, the Fed did remove the key word patient from its policy Statement, and suggested instead that an increase in rates remains unlikely at the April FOMC meeting. For more on this, click on the link: (VIEW LINK)
Author, columnist, investment strategist and macro-economist. Previous roles at Federal Treasury, OECD, Macquarie Bank and AFR. I develop economic insights and portfolio construction strategies for BetaShares' retail and adviser clients.