Today FED Daly's presented her opinion regarding central bank potential tightening plans>
- The US has reached full employment
- It is appropriate to raise interest rates to 2.5% by the end of this year
- There is a need to enter into a neutral monetary policy
- Inflation to remain high, may fell to 2% within 5 years
- The reason for relatively low 10-year yields compared to 2-year yields is the demand for safe assets
- The reversal of the curve correlates with recessions but does not cause it
One can see that Daly is predicting at least two 50bp hikes this year (which is required to push interest rates to 2.5%). Earlier, we also had hawkish comments from Kazaks and Nagel from the ECB (Bundesbank chief), who indicated that the QE should be ended soon and interest rates should be raised.
Today's hawkish comments from ECB members support the euro. The EURUSD pair is approaching major resistance around 1.09. Source: xStation5
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