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Powell must provide stability to implement Fed’s ambitious rate hike policy

Powell must provide stability to implement Fed’s ambitious rate hike policy

Damian Testi, investment manager at Walker Crips, comments:

Federal Reserve policy implies that at the climax of its December meeting we will see a 25 basis point rise to finish the year in the range of 1.25%-1.50%. I expect the Federal Open Market Committee (FOMC) to emphasise that the US labour market remains resolute and economic activity is strong. The road map I anticipate for 2018 will be a rhetoric for steady, gradual interest rate rises, and I expect three or four more 25 basis point hikes next year.

Janet Yellen, as Chair of the Federal Reserve, can certainly leave with her head held high when she faces the world’s press for the final time on Wednesday. Despite not serving a second four-year term as head of the Federal Reserve, her contributions are worthy of mention. In October 2014, Yellen successfully navigated the Central Bank to reduce its monthly purchases of securities to zero. Her implementation of glacial interest rate upticks enabled the Fed to start unwinding its unprecedented post-financial crisis quantitative easing programme.

As Jerome “Jay” Powell prepares to assume the mantle, he will need to maintain the status quo of steadiness and predictability. Having served on the Board of Governors since 2012 for the Federal Reserve, the expectation on Powell’s shoulders is to continue the monetary policy that has come to define his predecessor. The big unknown will be how he navigates the economy as and when it takes a dive, which will be inevitable during his tenure.

I expect that Powell will prove to be a wise steward of the Federal Reserve. There is a question mark on his depth of economics 101 versus his background blending both government and private sector experience. The key area to be alert to is Powell’s stance on financial regulation, as this is likely to be more relaxed than Yellen’s position.

 

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Four Broadgate

Jonathan Atkins / Anthony Cornwell
walkercrips@fourbroadgate.com
Tel: +44 (0)20 3761 4427

About Walker Crips

Walker Crips predecessors first bought and sold shares for clients on the London Stock Exchange in 1914. Through acquisitions, the company can now trace its roots as far back as the 18th century, making it one of the City of London’s oldest independent companies.

Today Walker Crips Group plc is a fully listed UK public company specialising in Investment Management, Wealth Management, Stockbroking and Structured Investments.

Walker Crips Group plc incorporates the following companies which are authorised and regulated by the Financial Conduct Authority.

  • Walker Crips Stockbrokers Limited (Member of the London Stock Exchange)
    • Walker Crips Investment Management
    • Walker Crips Alternative Investments
  • Walker Crips Wealth Management Limited
  • Ebor trustees Limited (trading as Walker Crips Pensions)
  • Barker Poland Asset Management LLP

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