Fed Officials Call For Increased Rate Hikes - Stock Markets Flounder

For those that thought the Fed might reverse course on interest rate hikes after Janet Yellen left, think again.  While San Francisco branch president John Williams has called for a more moderate path of three rate hikes in 2018, Austin branch president Robert Kaplan has called for MORE than three, indicating a change in tone at the Fed.  I have been predicting that the new Fed chair Jerome Powell will likely accelerate interest rates this year as the central bank pulls the plug on the massive stock market bubble we have witnessed throughout 2017.  So far, it would seem that the investment world is not too happy about this development as stocks plunged over 665.75 (666?) points today, losing three weeks of gains in just one day.

There is a theory that markets are being clubbed due to the release of the Trump FISA memo, but I have seen no indication that there is anything in that memo that is going to take down the elitist establishment.  In truth, the "memo" may only be a distraction away from other events, including a market plunge...

 

Federal Reserve Bank of San Francisco Fed President John Williams downplayed concerns that the U.S. central bank would overreact to a brightening economic outlook by ramping up the pace of interest-rate increases.

“I have boosted my growth forecasts for this year, but I don’t see an economy that’s fundamentally shifted gear,” he said in remarks prepared for delivery Friday in San Francisco. Noting that the Fed had outlined a path of gradual rate hikes in 2018, Williams said “my own view is we should stick to that plan.”

Bond yields jumped and stocks tumbled Friday following a stronger-than-expected January U.S. employment report which investors fear may prod the Fed into quickening the pace of policy tightening. Williams, who votes on Fed policy this year, didn’t comment on the jobs data in the text of his speech, but said he expected growth of 2.5 percent this year and inflation was headed higher.

Speaking earlier Friday in Austin, Texas, Dallas Fed President Robert Kaplan said left open the possibility of a faster pace of rate increase than the three hikes Fed officials have penciled in for this year, according to their median estimate in December. “I’ve said that I think the base case for 2018 should be three removals of accommodation, and we’ll see -- it could be more than that, we’ll have to see,” Kaplan said.

The Fed held rates steady at a meeting this week and upgraded its outlook for inflation, while noting that the economy would likely warrant further gradual rate increases.

 

READ MORE HERE:

https://www.bloomberg.com/news/articles/2018-02-01/asia-stocks-to-slide-as-tech-stumbles-bonds-drop-markets-wrap

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