Debate over the Fed raising rates in June

Debate over the Fed raising rates in June

The possibility of increasing rates in the US in June of this year is being actively discussed in various media. Fed is ready to take such steps, but only under condition that it will be conducive to the economic situation. The results for the second quarter of this year are considered as a starting point.

By the way, Fed officials have already discussed such a possibility in the framework of the April meeting. This has led the market for the "bullish" sentiment on the US currency. Now the US dollar has received quite substantial support. Amid fears of a new round of crisis around Greece, this support becomes even more apparent.

In order to kind of strengthen its position, Fed officials also noted that the risks in the global economy were lower compared with the previous session. The same applies to the financial sphere.

As part of the publication of Fed minutes it has also been mentioned about the fact that labor market conditions in the US continue to improve. At the same time, this trend is being observed even in the face of some economic slowdown.

Almost unanimously, participants in the April meeting said that the risks of global trends to the U.S. economy have also declined significantly. In this regard, many Fed members believe that if the data indicates upward trends in the American economy in the second quarter of this year, the situation on the labour market will continue to improve, it will be possible to raise rates and it will be quite natural.

Recall that in December 2015 for the first time in 9 years the base rate in the United States was raised. Current range is 0.25-0.5%. Thus, in 2015, the fed predicted a few increases in rates. However, in 2016, it became clear that these forecasts will be revised.

At previous meetings, Fed officials talked about the risks to the US economy and its slowing down. And only in April, they again raised the issue of rates growth. It is possible that the basic rate band will move towards 0.5-0.75% in June. If this happens, we will face the rise in price of US currency.

Thus similar trends are evident now. No sooner the Fed minutes were published, the dollar immediately headed for growth. In principle, this is quite a normal trend when the market regains positive pre-scenario.

We will remind that the issue of Greek debt is now being actively discussed. This puts a certain pressure on the single currency. So in the near future in the market one can observe rather high volatility. This is a good opportunity for binary options traders to profit on the oscillation.


Share to: