Recent weeks have seen tension over the outlook for US monetary policy build amidst mixed signals. Equities are fully priced; volatility is low; and the labour market has a decidedly positive hue. Yet elsewhere there is reason for concern: retail sales have not (yet) received a boost from the low oil price; business investment and housing partials are soft; and inflation expectations have declined.
In its written communications, the FOMC had chosen not to provide specific guidance to participants, instead preferring to keep their options open, on both the timing of the first hike and the path that normalisation will take hence. This is an approach continued in Chair Yellen’s semi-annual testimony.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
