what-will-the-fed-do-next

What will the Fed do next?

LGT says if rates peak at 5.50%, the global economy can still motor along.

Benjamin Pedley

July 07, 2006

In the early months of Federal Reserve Chairman Ben BernankeÆs tenure, the former economic adviser to President George W Bush is walking a tightrope as he wrestles with a pick-up in inflation driven by higher energy and commodity prices. Equity investors will be hoping he retains his balance at the levers of US monetary policy as too much tightening will slam the brakes on the economy, hurting equities, and too little will see inflation and long-term bond yields rise sharply. To be sure, US interest rates are always a focus for financial markets, but the uncertainty now about the course of Fed policy after years of a clear tightening bias makes policy settings of greater...

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