13 Feb 2015
Negative interest rate moves to affect the speed of Fed’s rate hike – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale comments on the currency wars, and further adds that with central banks shifting to negative interest rates, speed and extend of rate hikes by Fed might be affected negatively.
Key Quotes
“The Riksbank move, does reinforce the sense that global capital flows will anchor Treasury yields, while the fashion for negative rates will affect the speed and extent of rate hikes once the Fed finally gets off zero.”
“I hope it doesn't stop the Fed getting off zero (that would be an appalling policy error in my opinion) but a slower pace and a lower peak are guaranteed. That has an impact on FX markets but won't stop the dollar's advance.”
“Falling oil prices, and falling resource-related currencies around the world largely are partly a result of the US 'winning' the currency wars by keeping the dollar so low in 2003-2013. The best we can hope now is that the dollar's advance is orderly and the impact on global capital flows is limited.”
Key Quotes
“The Riksbank move, does reinforce the sense that global capital flows will anchor Treasury yields, while the fashion for negative rates will affect the speed and extent of rate hikes once the Fed finally gets off zero.”
“I hope it doesn't stop the Fed getting off zero (that would be an appalling policy error in my opinion) but a slower pace and a lower peak are guaranteed. That has an impact on FX markets but won't stop the dollar's advance.”
“Falling oil prices, and falling resource-related currencies around the world largely are partly a result of the US 'winning' the currency wars by keeping the dollar so low in 2003-2013. The best we can hope now is that the dollar's advance is orderly and the impact on global capital flows is limited.”