Forex Blog: Currency Trading News & Analysis.

July 25th 2006

Bernanke is vague about interest rates

In the days leading up to Ben Bernake’s semi-annual testimony before Congress, financial markets ratcheted up their expectations of an August rate hike to 90%, signaling that it was nearly certain to happen. After Bernanke’s testimony, the expectation of an August rate hike-proxied by interest rate futures-declined sharply. Now, investors have two conflicting sources on which to predicate their interest rate expectations: Bernanke, himself, and actual inflation data. Depending on which products and services are included in the calculation, inflation is hovering between 2.5% and 4%, which is higher than many economists would like to see. Meanwhile, Bernanke has indicated that he is essentially unconcerned with current inflation levels, and is not in any hurry to raise rates, which is bad news for dollar bulls. The Economist reports:

If the economy is slowing only modestly, as his words suggested, his relaxed attitude to inflation seems odd, especially after recent months’ inflation figures.

Read More: Making Sense of Bernanke

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Posted by Adam Kritzer | in Economic Indicators, US Dollar | No Comments »

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