The Federal Reserve'S Recent Rate Hike Is Sharply Reduced.

After the announcement of the referendum on Britain's withdrawal from Europe last Friday, agencies generally expect the Federal Reserve to postpone raising interest rates, and the expected market rate of interest reduction has begun to rise.

At that time, the futures price of federal funds indicated that the probability that the Federal Reserve meeting decided to cut interest rates in July was 10%, and the probability of raising interest rates was zero.

Until next February, the Federal Reserve will be more likely to cut interest rates than continue to raise interest rates.

Several high-ranking Federal Reserve officials who have recently voted have shown a wait-and-see attitude.

On June, James Bullard, the chairman of the Saint Louis fed, who had a big reversal of doves, reiterated the expectation of raising interest rates only once this year on Thursday.

He said the next day that Britain's retreat from Europe would not have a major impact on the United States, or even a "zero impact", because the two strong effects of the strong US dollar and the decline in US Treasury yields would be offset.

The Federal Reserve Chairman of the Cleveland Federal Reserve Loretta Mester believes that, although last month,

There is reason to postpone raising interest rates for the sake of Britain's referendum, but the US economy is improving, and it is still suitable for advancing interest rates.

After the British referendum decided to return to Europe, the Fed's recent interest rate hike was sharply reduced, but the Fed's recent official position is still raising interest rates this year.

Mester has the voting power of the Federal Reserve's monetary policy committee FOMC this year and has a hawk tendency.

In June this year, the Fed decided to maintain its current position.

Unchanged, she also voted in favour of not raising interest rates.

On Friday, local time, Mester explained that her support for not raising interest rates in June was the reason for "timing." it is clear that financial markets will fluctuate around the British referendum.

If voting supports Euro retreat and may disrupt the market, I think the US monetary policy has not lagged behind the curve. I think the price of watching before going to the next step is very small.

After the announcement of the British referendum's decision to return to Europe last Friday, the pound fell to 11% against the US dollar. The intraday drop was the highest since the British floating exchange rate in 70s of last century.

Since the referendum in Britain, the US dollar index has risen by about 2.6%. On Friday, the yield of us 10 - year treasury bonds fell to 1.3784%, a record low.

Mester also mentioned this Friday's speech.

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In her view, the global economy is interlinked, and we should pay attention to the fluctuation of commodity prices and exchange rate fluctuations, such as oil prices. They are not necessarily isolated events. For example, the sharp drop in oil prices since the middle of 2014 reflects partly the weakening of China and other countries' economic growth.

In his speech, Mester did not set a timetable for raising the Fed's interest rate, but pointed out that the delay in raising interest rates had a negative impact on financial stability, economic prospects and the use of policy tools: "waiting too long increases the risk of financial stability, increasing the possibility of more radical action in the future, which brings a series of risks to the economic outlook."

"If we fail to put policy positions in a more normal direction at the right time, I believe that these policy tools may actually lose the significance of discussion, because the public will think that they are totally ineffective, and this possibility is not very small.

If we anticipate the need for these tools in the future, this is a risk. "

Mester said she still felt it was appropriate to boost interest rates, especially in the context of the US economy.

She believes that corporate investment is still weak, but not a "significant reversal" in the US labor market, but rather that US employment and inflation are expected to make continuous progress. In general, economic growth is resilient, "a little faster than trend, which is enough to make great progress in the job market."

Earlier, Wall Street's article also mentioned that on the same Friday, Stanley Fischer, vice chairman of the Federal Reserve, said that it is too early to judge whether Britain's withdrawal from Europe will affect the outlook of the US economy. We must wait and see how the incident will affect the US and global economy.

He believes that since the early May announcement of non farm employment report in June, the performance of the US economy has been very good.

For the US outlook, non-agricultural reporting is more important than Britain's withdrawal from Europe.

The Fed has no plan to implement negative interest rates.

Wednesday's Bloomberg news show shows that the market expects the September Federal Reserve to cut interest rates more than interest rates.

In September, the Fed decided to raise interest rates by less than 10%. The probability of cutting interest rates was more than 20%, and the probability of not being able to move was close to 70%.