According to US Bureau of Economic Analysis, the US GDP expanded to 3.2 % in the first quarter of 2019, and the short term GDP band is to upside risk as well as in medium term and in long term. Accordingly, it is estimated for the US GDP to increase overtime by the short, medium and long term GDP band. The US Bureau of Labor Statistic reported the unemployment rate stood at 3.6 % in May 2019. And, the short, medium and long term unemployment bands are to downside risk. Thus, the short, medium and long term band indicates for unemployment rate to continue to fall overtime. The US Bureau of Labor Statistic reported that the inflation rate falls to 1.8 % in May 2019, and the short term inflation band to downside risk as well as the medium term inflation band to downside risk but the long term of the inflation band to upside risk. At such, inflation is projected to fall in medium term but likely to rise in long term. The Federal Reserve kept the interest rate at 2.25 % during the May meeting and the current interest rate 2.25% is above the current inflation rate 1.80 %.
Based on the short and medium term inflation band analysis, both the short and medium term inflation bands to downside risk and at such the Federal Reserve less likely to iincrease interest rate in short and medium terms. Interest rate increases will likely to be made if and when the short term inflation band turned to upside risk or the medium term inflation band turned to upside risk. Unlikely the Federal Reserve to increase interest rate based on the long term inflation band due to monetary policy mainly applied for medium term, occasionally for short term.
According to US Census Bureau, the US trade deficit narrowed to $ 50.8 billion in April 2019 from $ 51.9 billion from the previous month. However, trade balance band analysis indicates that the trade balance to downside risk in short, medium and in long terms. This is the primary issues being tackled by the United States to re-negotiate fair-trade arrangements with major trading partners. The fair-trade rearrangements pushed by the US government with major trading partners will be reached by overtime and this effort will continue to narrow the US trade deficit to support the acceleration of the GDP band to upside risk.
According to US Internal Revenue Service (IRS), the massive corporate tax cut from 35 % to 21 % by the US President Trump will return all the US corporations back to the United States and result substantial capital inflow into the US economy and their returns will strengthen and empower the US finance as well as to continue to pressure the unemployment rate to downside risk, lower than anticipated.
The Federal Reserve unlikely to increase interest rate in short and medium term by the downside risk of the short and medium term inflation band, however the USD currency will continue to be stronger driven by the continuing acceleration of the economic growth as indicated by the upside risk of the short, medium and long term GDP band. Stronger USD however may not supportive for the on-going fair-trade re-negotiation made by the US government and the stronger USD will cause the widening of the trade deficit. At such, Federal Reserve Bank of New York may consistently to undertake "market sterilization operation" to slower the strengthening of the USD in the market and larger sterilization may be undertaken if and when the USD-pegged pairs to reach the upper ceilings/bands of the medium term exchange rate target zone by the Louvre Accord. The FRB of New York market sterilization supportive to the global central banks by not necessary to undertake market sterilization to slower the weakening of their currencies by the USD but the width (wide) of the target zones may vary from currency pairs to currency pairs but all remain to be in compliance to the Plaza, Louvre, EMS and consensus (policies).
Based on the short and medium term inflation band analysis, both the short and medium term inflation bands to downside risk and at such the Federal Reserve less likely to iincrease interest rate in short and medium terms. Interest rate increases will likely to be made if and when the short term inflation band turned to upside risk or the medium term inflation band turned to upside risk. Unlikely the Federal Reserve to increase interest rate based on the long term inflation band due to monetary policy mainly applied for medium term, occasionally for short term.
According to US Census Bureau, the US trade deficit narrowed to $ 50.8 billion in April 2019 from $ 51.9 billion from the previous month. However, trade balance band analysis indicates that the trade balance to downside risk in short, medium and in long terms. This is the primary issues being tackled by the United States to re-negotiate fair-trade arrangements with major trading partners. The fair-trade rearrangements pushed by the US government with major trading partners will be reached by overtime and this effort will continue to narrow the US trade deficit to support the acceleration of the GDP band to upside risk.
According to US Internal Revenue Service (IRS), the massive corporate tax cut from 35 % to 21 % by the US President Trump will return all the US corporations back to the United States and result substantial capital inflow into the US economy and their returns will strengthen and empower the US finance as well as to continue to pressure the unemployment rate to downside risk, lower than anticipated.
The Federal Reserve unlikely to increase interest rate in short and medium term by the downside risk of the short and medium term inflation band, however the USD currency will continue to be stronger driven by the continuing acceleration of the economic growth as indicated by the upside risk of the short, medium and long term GDP band. Stronger USD however may not supportive for the on-going fair-trade re-negotiation made by the US government and the stronger USD will cause the widening of the trade deficit. At such, Federal Reserve Bank of New York may consistently to undertake "market sterilization operation" to slower the strengthening of the USD in the market and larger sterilization may be undertaken if and when the USD-pegged pairs to reach the upper ceilings/bands of the medium term exchange rate target zone by the Louvre Accord. The FRB of New York market sterilization supportive to the global central banks by not necessary to undertake market sterilization to slower the weakening of their currencies by the USD but the width (wide) of the target zones may vary from currency pairs to currency pairs but all remain to be in compliance to the Plaza, Louvre, EMS and consensus (policies).
Comment:
The Federal Reserve held the target range for the federal funds rate at 2.25-2.5 percent but dropped a promise to be "patient" in adjusting rates and signaled possible rate cuts of as much as half a percentage point later this year. The policymakers left economic projections for growth and unemployment mostly unchanged but the headline inflation was forecasted at just 1.5% for the year, down from the 1.8% projected in March.