Federal Reserve members confirmed the monetary policy trajectory in multiple speeches over the week, with prevailing sentiment pointing to higher interest rates by the end of 2015 even though any increase could be reversed if market volatility increases as a result. Aside from the Federal Reserve’s rhetoric, housing and retail data faltered, highlighting the risks to the projected timeline. Across the Pacific, Chinese data confirmed the broader slowdown in the economy as global headwinds impact the export machine. With both imports and exports tumbling and growth at its weakest level in years, the Central Planners will have to increase accommodative policy measures to meet ambitious growth targets set by the Government. Further west, the European Central Bank and Bank moved to maintain monetary policy measures and quantitative easing even though the supply of eligible sovereign bonds continues to shrink. Greek exit fears are rising once more as the nation’s creditors refuse to compromise or extend repayments. Although contagion risks are considered mostly contained, there is much uncertainty about how a default will impact the common currency and Euro Area economy.
Federal Reserve Jawbones Higher Interest Rates
Weekly Report - 20/04/2015