By: Etoro
Today the Fed’s two day session will be concluded with an announcement on the future monetary policy. Amid the turmoil in Europe the Fed is likely to continue and reiterate that benchmark lending rates will remain low for an extended period leaving the benchmark rate at 0.25%. Although the US economy has showed some encouraging signs of recovery from one of its worst recessions in history the Fed still seems unwilling to remove its pledge for low rates and provoke its low rate cheap money policy.
Rhetoric on Unemployment and Housing will gather focus-The Federal reserve still remains rather cautious on the recovery especially when it comes to the Job market where the 9.7% unemployment continues to clamp down growth. In the Housing market the historical jump of 26.9% MoM in new home sales is rather comfortable for the Fed coming after the Fed terminated the purchases of mortgage securities to support housing demand. Although the Fed is likely to pledge for a prolonged period of low rates for an extended period, an upbeat outlook from the Fed on the US economy will raise speculations by market participants that the debate on rate hikes is heating up among the Fed members. This will provide further support for the Greenback spiked to a one year high against the Euro at 1.314 in reaction to the dismay over the bailout of Greece and the downgrade of its bonds to “junk” by S&P.
