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Next Fed Meeting (25th October '06)

My take is a rate PAUSE at 2.15am later ........ Shiok time for STI 2molo!!!

 

WASHINGTON (MarketWatch) -- Holding interest rates steady "for a time" makes sense as monetary policymakers study data about the economy, the president of the San Francisco Federal Reserve said Monday.

"Holding the stance of policy steady for a time makes sense to me," said San Francisco Fed President Janet Yellen in prepared remarks to an independent bankers' group in California.

She characterized current interest-rate policy as "moderately restrictive," saying it is appropriate as officials try to temper inflation pressures and scrutinize incoming economic numbers.

Analysts have expected the Fed to keep its finger on the pause button, and Yellen's speech appeared to keep up support for a pause.

But she cautioned that the full effects of the central bank's 17 rate increases haven't yet been felt, and that those lags can take from several months to a couple of years. Read Yellen's remarks.

The effects of those rate increases, she said, "are probably still in the pipeline."

The Fed stopped hiking interest rates in August after 17 consecutive rate hikes raised its key target Fed funds rate from 1% to 5.25%.

Inflation was a central topic of Yellen's speech Monday, with the bank president warning that "more progress is needed" to bring down core inflation. Core inflation excludes volatile food and energy prices.

Inflation is, however, edging down by itself, she noted. Below-trend growth in the economy and stabilizing oil prices are contributing to the recent easing in inflationary pressures, she said.

The decision to pause rate increases in August gives the Fed time to see if its moves have been adequate to contain inflation, she said.

"With the passage of time, we will gain more information on whether we have done enough to assure that inflation moves gradually lower," Yellen said.

Federal Reserve policymakers meet next on Oct. 24 and 25.

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An update of Fed .......

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LINCOLN, Neb. (MarketWatch) -- U.S. inflation has peaked, will stabilize the rest of the year and then decline, Kansas City Federal Reserve President Thomas A. Hoenig predicted Wednesday.

At an economic forum sponsored by the Tenth Federal Reserve District, Hoenig described an outlook of growth into next year below the economy's potential. That could be interpreted as setting the stage for reduced interest rates sometime in 2007.

A nonvoting member of the Federal Open Market Committee, Hoenig made it clear that he Fed's two-year campaign of raising the Fed funds rate, which it stopped in August, is continuing to do its work on the inflation rate.

"I feel it will come down," he said. He also predicted core inflation, excluding food and energy, will fall.

 

Shiok! Now maybe have some chance of a rate cut in next month's FOMC due to yesterday's lower US manufacturing data. The current slowing housing is another main concern.

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NEW YORK (MarketWatch) -- The fed funds futures market is now pricing in a slight chance that interest rates will be cut as early as October, when the Federal Reserve meets on the 24th and 25th.

November fed funds futures were last up 0.01 at 94.76, which implies a 4% chance that the Fed would lower its target for overnight rates to 5% from 5.25%. Late Thursday, the futures were pricing in no chance of a rate hike or cut.

December fed funds, which starting pricing in a chance of a cut for the first time on Thursday after a surprise negative reading on manufacturing activity in the Philadelphia region, was last unchanged at 94.76. That suggests about a 7% chance of a rate cut.  

 

Central bank keeps key interest rate at 5.25% for 2nd straight meeting, cites slowing economy. (more). www.money.cnn.com

Fed policy-makers held their federal funds rate, an overnight bank lending rate that affects rates on credit cards, auto loans and home equity lines of credit, at 5.25 percent. It was the second straight meeting where the Fed decided to leave rates alone after raising them 17 straight times starting back in June 2004.

Pause now, cut tomorrow? (more)

The decision was widely expected on Wall Street. And with the housing market slowing and inflation showing signs of cooling, some economists say the Fed could start cutting rates as early as next year.

But other analysts said calls for Ben Bernanke & Co. to start cutting rates soon are probably premature.

Holding it steady as it goes.

mkt observers r starting to wonder when the Central bank might want to consider lowering rates as the economy starts to show signs of softness.

 

Agree with billywows that Oct should be bad after strong Aug and Sep. But for rate hike, we have to wait and see.

 

My take is a rate hike to 5.50% for the last time to round up Y2006! October should be a bad month as August and September have been surprisingly good against traditional odds.

The last FOMC meeting for the year will be on December 12th. It's Christmas season - so Ben & company won't spoil the fun for us! Shiok time!

As I had read it somewhere - buy in November and sell in May!