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Updated: 31-May-06 15:28 ET New in the Research Section: FOMC

Fed Minutes Inconclusive but Consistent with June Hike


The May FOMC minutes didn't offer much insight on the June 29 policy direction. They noted that "members were uncertain about how much, if any, further tightening would be needed after today's action". However, if inflation worsened -- as the back to back 0.3% gains in core inflation suggest -- some further policy firming could be required. With a full month of data ahead of the month-end decision the data-dependent conclusion is far from clear but sides with a June rate hike.

The Committee agreed to emphasize that "the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information." Members debated the appropriate characterization of inflation expectations in the statement. The apparent pickup core inflation and longer-term expectations, while worrisome, was relatively small. They remained within the range seen over the past couple of years, and the increase could well reverse before long. Accordingly, it appeared appropriate to characterize inflation expectations again as "contained."

The funds futures market clung to the idea that the Fed would respond to the recent inflation data with further policy firming. Obviously, an offset in the core inflation data released on June 14 carries the potential to reverse the policy expectations. Near the close the July contract priced in 74% probability for a quarter percent hike to a 5.25% policy rate at month end. The implied rates peak at November's 5.32% as the market begins to price in the potential for another hike after June 29.


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هناك احتمال ضعيف لرفع نسبة الفائدة لاجتماع المصرف الاحتياطي الفدرالي في اجتماعة القادم في 29-6-2006م الا في حالة واحده ان تسفر التقارير الاقتصادية عن نسبة في التضخم اكثر من 0.3% .
وقد نرى ارتفاع في معدل سعر الفائدة ولكن بعد الاجتماع القادم .


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يجب استغلال ارتفاع الاسواق وعدم النظر الى الا في التقارير الرسمية التي تصدر من اصحاب قرار الاقتصاد الامريكي فهي المحرك الوحيد لاتجاه الاسواق .
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اهلين من نجد
بصراحه وارن بوفت عقليه استثمارية تستحق كل الاحترام
وانت تستحق كل التقدير
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