Hans Goetti, head of investment Asia, Banque Internationale À Luxembourg gives his views on comments from the US Federal Reserve.
Below is the verbatim transcript of Hans Goetti's interview with CNBC-TV18's Nigel D'Souza and Reema Tendulkar
Nigel: How did you read the Fed comments, were there any surprises with regard to the tone, with regard to the job market or was everything on expected lines?
A: No real surprises. The Federal Reserve (Fed) has become a bit more offbeat on labour markets, something that we have been saying for a long time that the labour market is actually improving. Now they have recognised that there is much less slack in the labour market than previously thought.
What was interesting is the language, they kept the ‘considerable period of time’ phrase to the rate hike and that was perceived to be positive for the financial markets.
Reema: So on the back of this assessment of the labour market as well as the US economy, would experts like you change your assessment about when the first rate hike could come from the Fed?
A: The consensus is really looking at the second half of 2015 but there is still a long time to go, a lot can happen in 10-11 months. What we have to bear in mind is that the composition of the FOMC in 2015 will be quite a bit more dovish than it was this year. So if you have any negative surprise in the economy, any deterioration in certainly indicators there is a good chance that they may push it out. So I would not look for an earlier rate hike. But given the new composition of the FOMC next year could be later rather than sooner.
Nigel: How are you reading the gold price movement as well as the currency movement?
A: Well of course this will all put upward pressure on the US dollar, the divergence in monetary policy on one hand you have the Fed that is moving towards tighter policy and on the other side we have the ECB who obviously has more work to do, the Bank of Japan who is still very loose. So if anything it is very bullish for the dollar and of course by definition that would put downward pressure on gold.
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