Moneycontrol
Oct 17, 2016 09:10 AM IST IST | Source: Moneycontrol.com

Fed unlikely to up rate in 2016 as US economy weak: CLSA's Wood

The current lack of cyclical acceleration is clear from the declining expectations of third quarter GDP growth, says CLSA newsletter GREED & Fear‘s author Chris Wood

Moneycontrol Bureau

The US Federal Reserve is unlikely to raise interest rate in 2016, writes CLSA newsletter GREED & fear’s author Chris Wood. This is contrary to the widely held view in the market that a 25 basis point-hike is imminent.

“GREED & fear’s base case is still no rate hike this year though GREED & fear will admit that it is a very close call given the obvious desire of many FOMC voting members to have one token rate hike before the end of the year – just as occurred in December 2015 – in an effort to preserve their vastly diminished credibility since they began 2016 predicting four rate hikes,” writes Wood.

“The fundamental point about the American economy remains that growth is extremely weak. The current lack of cyclical acceleration is clear from the declining expectations of third quarter GDP growth,” the newsletter further says.

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