The Federal Reserve Has Gone Through A Long Way: "Long Time" Wording Or Being Eliminated

Last week, the "strongest employment report" after the crisis was handed over. Fed officials also expressed interest rate expectations on different occasions, but the US employment market index (LMCI), which was released recently, is not as expected as the Fed's latest employment indicator. "The report of November"

What is the position of the US Federal Reserve to hold a new round of interest Conference on 17~18 this month? Will the phrase "maintain a low interest rate for a long time" be rejected?

Hawkish positions are gaining the upper hand.

JONHILSENRATH, a Wall Street Journal reporter who has long been tracking the Fed's policy dynamics and known as the Federal Reserve news agency, wrote on 8 local time that the Fed is expected to remove the wording of maintaining "low interest rates" for a long time in next week's statement, and reiterates its plan to increase interest rates in 2015.

The two top officials of the Federal Reserve, the Federal Reserve vice chairman Fisher (StanleyFischer) and the New York Federal Reserve Chairman Dudley (WilliamDudley), have recently made hawkish statements.

"Compared to a few months ago, we are now getting closer to giving up this phrase."

Fisher said last week.

Dudley said that the expectation of raising interest rates in the middle of 2015 is reasonable.

For Yellen, "for a long time to maintain low interest rates", Dudley believes that it should not be regarded as "iron commitments."

The normalization of monetary policy depends on the economic situation and the reaction of the market to the trend of the federal funds rate.

The process of "normalization" is like a "big breakthrough". Before this, all circles raised a heated debate about when to quit QE, and the noise of "QE4 or coming".

At present, with the continuous improvement of the US market, it is imperative to release the signal for raising interest rates, which may be a major task for the new round of interest conference held on 17~18 this month.

It is worth noting that in January 28, 2004, Greenspan changed the wording of maintaining "low interest rates" for a long time at the FOMC meeting, instead of maintaining "low interest rates" for a period of time (forawhile) instead.

Until June 30, 2004, the Fed announced that it would raise short-term interest rates from 1% to 1.25%.

It can be seen that it took 5 months to change from wording to action.

At present, the pace of "raising interest rates to break through barriers" is approaching.

The strong non farm employment report published by the DOL last week is a "promoter" of the current increase in interest rates.

The report shows that in November, the number of non farm employment data was 321 thousand, far exceeding the expected 230 thousand, a record high since January 2012, and the average hourly wage that has not seen a rise has increased by 0.4% over the past month, the biggest increase since last June.

However, "coolant" has not disappeared completely.

The Federal Reserve Monday released its new indicator of job market conditions: the employment market index (LMCI), which is divided from the optimistic results of non farm businesses.

Data show that November was 2.9, lower than 3.9 revised in October, after September was 2.5.

The market nicknamed LMCI the Fed's "Pro son". The Fed has indicated that the index will reflect the real situation of the labor market better than non-agricultural.

In addition, Fed officials are cautious about raising interest rates.

Lockhart, chairman of the Atlanta Federal Reserve, said on Monday that he was not so eager to delete "quite a long time". He hoped to wait until the economy was strong enough to bear the interest rate hike. DennisLockhart

Once the Fed raises interest rates, the global market is bound to shake. In May 2013, the emerging markets, which had suffered from the tapertantrum, were particularly worried.

It is noteworthy that BankforInternationalSettlements (BIS) also expressed concern about the strengthening of the US dollar in its quarterly report.

Quarterly reports indicate that the continued rebound in the US dollar may damage the credit of some enterprises, thereby exposing the financial fragility of emerging markets.

BIS pointed out that enterprises in emerging markets borrow heavily by issuing US dollar securities.

BIS says emerging market borrowers issue about $2 trillion and 600 billion of international debt securities, of which 3/4 are priced in US dollars.

Meanwhile, cross-border loans issued by multinational banks to emerging market economies totaled $3 trillion and 100 billion in the middle of 2014, mostly in US dollars.

ClaudioBorio, an economist at BIS, said: "if the US dollar as a major international currency continues to rise, it may increase the debt burden of emerging markets, thereby exposing the mismatch of money and funds." (Claudio Borio)

If US interest rates normalize, the tightening of financial conditions will only worsen.

Since the end of June, the US dollar has risen 12% against a basket of major currencies.

"At present, I invest in order to preserve assets, not to earn high returns, because I am very concerned about the situation after the Fed raises interest rates."

Taleb, author of the "black swan", is known as the father of the black swan. NassimNicolasTaleb said in an interview with reporters.