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February 14th 2006

Retail Sales Data confirms US rate hike

Any doubts over the short-term future of American monetary policy have been sufficiently erased, as the strong economic data foreshadow a rate hike at next month’s Fed meeting. Economists were previously unsure as to whether the US economy could support an additional rate hike. By some approximations, however, the economy is as strong as it was in the late 1990’s. On a seasonally-adjusted basis, retails sales data recorded the largest monthly increase in over five years. Accordingly, it looks like Ben Bernanke’s first task as new Chairman of the Federal Reserve Bank will be to raise the federal funds rate to 4.75%. AFX News Limited reports:

Analysts said the data provided further evidence that the US labour market is strong enough to warrant at least one more Fed rate hike, in contrast to expectations last month that the central bank was about to end its policy of raising rates.

Read More: Dollar firms further after US retail sales surge in Jan

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Posted by Adam Kritzer | in Central Banks, US Dollar | No Comments »

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