No reason for the Federal Reserve to commence its rate liftoff in December 2015, explains Charlie Gibson, Head of Mining at Edison Research, as he joins us in today’s Finance Show to share his analysis on the US interest rate scenario.
https://www.youtube.com/watch?v=vl33_Rv5jPc
Forget December, chances are dim for a 2016 rate hike too
Gibson compares the fed funds rate, the overnight rates and the US inflation. Using charts he explains how the December rate hike expectation from the Fed might not happen.- the key player here being the low inflation.
Gibson explains that there used to be a strong correlation between US inflation and interest rates during the 1950’s, which broke down during the 1980’s and is again seen climbing.
For further technical insights, and the charts, watch the video.
Looking at the current re-correlation, Gibson believes that the falling US inflation will likely hold the Fed from hiking rates in 2015.
Gibson ends by saying that, at least mathematically, a December Fed rate hike isn’t justified, and the falling inflation questions the early 2016 expectations too.
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