There have been some rumblings about about October or December, but there doesn't seem to be the same commitment post-Fed as we've seen in the past. I think there is a growing realization that the timing on lift-off may actually be data-dependent, just as the Fed has always maintained . . .
Cited concerns in the FOMC statement about restrained economic activity and further downward pressure on inflation may now actually get markets to take note of those data. We've followed the data and have suggested in recent commentary that there is a growing risk of a disinflationary depression.
How will central banks react to that risk? They'll do what central banks do: They'll lower rates even further where they are able to do so, potentially taking them negative. And they'll flood the market with liquidity via QE.
The failure of the Fed to tighten has increased the likelihood that the ECB will ease further to keep the euro relatively weak and hopefully prevent their economy from stalling entirely.
Given the Q2 contraction in the Japanese economy and recent downward revisions to Q3 forecasts, I wouldn't be surprised to see another double-down on Abenomics.
Even though the latest downgrade of Japanese sovereign debt might reasonable be interpreted as an indictment of Abenomics, what other options do Abe and Kuroda have?
"Despite showing initial promise, we believe that the government's economic revival strategy - dubbed 'Abenomics'- will not be able to reverse this deterioration in the next two to three years." — S&P statement on Japan downgrade Eh, what's another two to three years when you're into your third lost decade?
During her press conference yesterday, Janet Yellen was asked if she was concerned the U.S. "may never escape from this zero lower bound situation." She responded, "So I would be very surprised if that's the case. That is not the way I see the outlook or the way the committee sees the outlook."
When the BoJ's discount rate initially fell below 1.0% in 1995, I'm sure Japanese policymakers would have never imagined that rates were going to approach zero and stay there for two decades.
When they launched the first round of QE in the early-2000s, I'm sure they thought it was the answer to all their woes.
When it wasn't, it eventually begat Abenomics, which isn't having any more success.
Yellen may indeed end up being surprised.
Nothing really surprises me anymore: A negative Fed funds rate wouldn't. Certainly QE4 wouldn't . . .
Ex. - - get out of the fiat paper started and it will be a lot more to come -
Here We Go: China Dumps HALF A TRILLION U.S. DOLLARS: “Something is Very, Very Wrong… They Are Being Aggressively Sold” - By conspiracyclub - Jul 24, 2015 5668 2
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