Four reasons why the FED should hike rates in September
By Christopher Dembik, Economist at Saxo Bank
The FED's last three monetary tightening cycles
1994 – 1995: During that period, the FED's main policy rate has risen by 300 basis points up to 6%.
1999 – 2000: The FED's main policy rate has risen from 4.75% to 6.50%.
2004 – 2006: In June 2004, the FED starts a monetary tightening that will bring its key rate from 1% to 5.25%. During the month following the first hike, the dollar index climbed 2.29% and gold lost 3.35%.
A large number of investors dream of a QE4 or at least of a first rate hike postponed to 2016 by the FED. That would be a headlong rush. Two arguments have been raised in support of a status quo:
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