Confirming you are not from the U.S. or the Philippines

By giving this statement, I explicitly declare and confirm that:
  • I am not a U.S. citizen or resident
  • I am not a resident of the Philippines
  • I do not directly or indirectly own more than 10% of shares/voting rights/interest of the U.S. residents and/or do not control U.S. citizens or residents by other means
  • I am not under the direct or indirect ownership of more than 10% of shares/voting rights/interest and/or under the control of U.S. citizen or resident exercised by other means
  • I am not affiliated with U.S. citizens or residents in terms of Section 1504(a) of FATCA
  • I am aware of my liability for making a false declaration.
For the purposes of this statement, all U.S. dependent countries and territories are equalled to the main territory of the USA. I accept full responsibility for the accuracy of this declaration and commit to personally address and resolve any claims or issues that may arise from a breach of this statement.
Cancel Confirm
We are dedicated to your privacy and the security of your personal information. We only collect emails to provide special offers and important information about our products and services. By submitting your email address, you agree to receive such letters from us. If you want to unsubscribe or have any questions or concerns, write to our Customer Support.
Confirm
Octa trading broker Sign up Log in
Octa trading broker
Open trading account
Trading news
Back
20 Oct 2022

Fed's Evans: Rates moving too high could have 'nonlinear' impact on economy

''Interest rates that move too high could have a "nonlinear" impact on the economy as businesses become more pessimistic about the future, Chicago Fed President Charles Evans said on Wednesday, mapping out a case for caution in the central bank's battle against high inflation,'' Reuters reported in Tokyo trade:

The Fed currently projects its target federal funds rate will rise to 4.6% next year, and Evans said that "if we have to increase the path of the fund rate much more ... it really does begin to weigh on the economy." "I worry that it's sort of a nonlinear kind of impact ... with businesses becoming very pessimistic and changing their strategies in a sort of notable way," Evans said in remarks to reporters after an event at the University of Virginia.

Key notes

  • If the Fed pushes the policy rate much further than planned it could start to weigh on the economy.
  • Worried that at some point rate increases could have a "nonlinear" impact, with businesses becoming more pessimistic.
  • Fed "honing in" on the proper level for restrictive monetary policy. 
  • Following Sept. cpi still sees a policy rate next year of 4.5 to 4.75% range as appropriate.
  • Don't think u.s. is embarking on a wage-price spiral, but inflation risk remains to the upside.
  • Low unemployment, and consumer strength still leaves a path for a soft landing, though "closer call than normal".
  • Fed facing hard communications challenge as it approaches a point to slow the pace of rate increases.

Meanwhile, the Fed is expected to lift rates by another 75 basis points when it meets on November 1-2, with an additional 50 basis points or 75 basis points also increase likely in December. 

US dollar update

As for the US dollar, it rallied from two-week lows mid-week with a rise in US Treasury yields that made 14-year highs as investors maintained expectations that the Federal Reserve will continue to aggressively raise rates and is now breaking structure on the DXY daily chart as follows:

Oct 20, 2022

AUD/USD stays defensive around 0.6250 on mixed Australia employment, NAB data

AUD/USD remains on the back foot around 0.6250 despite mixed Aussie statistics as risk-aversion and hawkish Fed bets propel the US dollar during Thurs
Read more Previous
Oct 20, 2022

China PBoC Interest Rate Decision remains at 3.65%

China PBoC Interest Rate Decision remains at 3.65%
Read more Next