Fed’s Williams: Sees a terminal rate of 2% to 2.5% by end of next year

Feds Williams: Fed will grapple with faster bond buying taper

More from New York Fed’s Williams:

  • He doesn’t see a compelling argument for taking a big step at the beginning of interest rate lift off
  • Fed can steadily move up interest rates and reassess by speeding up or slowing down pace of rate increases if needed
  • He sees interest rates moving to normal levels more quickly than in 2015 and 2016
  • Basic path of moving to a more normal Fed funds rate of 2% to 2.5% by the end of next year makes sense to him
  • He doesn’t see the need for asset sales in the near term because Fed can shrink balance sheet quickly through run off
  • Sales of MBS are something the Fed can consider later on to achieve goal of holding portfolio that invest primarily in treasury securities
  • He expects that the Fed could carry out MBS sales itself in the house if needed, but a decision has not been made

Some points of interest are his

  • Assessment of the terminal rate. If 2% -2.5%, that implies seven to nine total tightenings by end of 2023. There are some analysts who see seven tightenings in 2022.
  • He is not looking to do quantitative tightening
  • Thinks the Fed can sell MBS portfolio privately to investors. As long as the housing market remains strong, and so does the economy, the large investors may have an appetite for higher yields from mortgage-backed securities

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 EURUSD 
EUR/USD

The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars.  Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others.

The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars.  Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others.
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