If you look back to 1994 when the Fed was hiking rates continuously, after every rate hike the Fed adopted a neutral bias. However, the tightening cycle continued until early '95, for a total of 300 basis points (3 percent). We are not looking for that type of tightening cycle this time, but nevertheless it does suggest that the neutral bias does not preclude further rate hikes down the road.
More Quotes from Harvinder Kalirai:
If manufacturing is recovering from this drag on growth, which is already strong, it is probably going to raise some concerns at the Fed.Harvinder Kalirai
If the market begins to expect a more imminent end to the Fed's tightening cycle that would certainly remove the interest rate support for the dollar,
Harvinder Kalirai
We're starting to see positive signs that the Japanese business cycle may be moving around. The dollar-yen should trade lower in coming months.
Harvinder Kalirai
We're seeing a benign neglect in terms of the weakness of the Japanese yen. There's little reason for the Japanese to be worried because it seems the lower the yen gets the bigger the support it gives to exporters.
Harvinder Kalirai
High commodity prices are boosting Brazil's terms of trade and leading to record trade surpluses. A favorable external backdrop and still high real interest rates should support the Brazilian real.
Harvinder Kalirai
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