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Federal Reserve’s September Rate Decision
By DailyFX Updates | August 30, 2007
All eyes are now on the Jackson Hole Symposium this weekend. Bernanke will be speaking on the state of the housing market, which could play a major role in determining what will happen with interest rates next month. Economists and Fedwatchers are still divided on whether the central bank will actually lower interest rates, but the curve is already pricing in a quarter point cut. Therefore the disappointment will come if the Fed DOESN’T lower rates.
Also don’t forget, every single major central bank will be meeting and announcing their own interest rate decisions BEFORE the Fed. So where currencies move will also be dependent upon who says what first. If the ECB fails to lift interest rates, but suggest that they remain hawkish and could raise rates again in the months to come, it will be bearish for the Euro in the short term but potentially bullish in the medium term especially if the Fed actually lowers US interest rates.
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