As per reported in CNBC, do read it here. Briefly, this was what was reported.
Fed Chair Janet Yellen said the increase in rates could be “appropriate relatively soon.” (In English, it means that it should be quite soon) 😛
She said if rates were not raised soon, in future, Fed may have to move too quickly. (This meant that Fed favours a gradual increase which meant that they actually do look to the future before deciding)
The rates should also be raised to that it does not encourage excessive risk-taking and ultimately undermine financial stability. (Low rates are said to encourage speculative activities because there’s nothing to be gained by doing nothing!)
As per market’s anticipation, 91 percent expects the rates to be raised in December 2016. (Please raise it, time to end the expectations and just do it)
Why are they raising it? Yellen shared that the U.S economy is going to wards maximum employment and Price stability. GDP picked up and inflation is running faster too. Business investment remains soft while consumer spending is growing moderately. (Note, Employment and Inflation are two indicators of a good and growing economy. Reminder my dear Malaysians)
Yellen also said the low oil prices is one reason for the low levels of business investment. She expects the full employment to be even better. (Yes, I have written about low oil prices before which is NOT necessary a good thing. Yes, the U.S unemployment rate is definitely higher than Malaysia today)
So in conclusion, we should expect Fed making that decision within the next one month. In fact looking at all those numbers published, the decision should be very easy too. Please do it. So, you can sort of guess where the US$ will be going till then. Yes, probably UP. No rewards for guessing the ringgit’s movement, despite a positive Q3 GDP growth versus so many other economies of the world. I hope Bank Negara Malaysia (BNM) will be stricter to ensure the trading of currencies are really for trade and not for something else. Happy understanding.
written on 17 Nov 2016
Next suggested article: Ringgit should be driven only by fundamentals and genuine trade