US Monetary Policy: Peering Into 2018
US monetary policy in 2018 will become increasingly dominated by the emergence of supply constraints, particularly in the labour market.
Failure to slow the economy to a more sustainable growth path will raise the ante on the FOMC to adopt a more hawkish policy approach.
The Fed has extremely limited experience of the economy operating at full employment for a protracted period which increases the risks of a policy mistake being committed, somewhat similar to the late-1960s.
Supply-side constraints in the economy could be lowered by higher labour productivity and substituting capital for labour, although this will not prevent the requirement to raise the federal funds rate.
The yield curve usually flattens when the Fed engages in a tightening cycle, which could be exacerbated by further declines in the term premium embedded in bond yields.
Historically, the yield curve becomes inverted at full employment, something which is currently absent, but inversion in the present environment would probably require a Fed policy mistake.
DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the intention of delivering independent global macro investment insights and new thematic long-term ideas to investors, along with an agnostic opinion of the markets.
Said DeSaque has over 29 years of experience working as a professional economist in financial services, primarily based in London. His working role has involved extensive travel around the world, bringing him into contact with investors of different cultural backgrounds and investment requirements. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist and Investment Strategist at US banks Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he became Head of the London Economics Department in 1996. This role allowed him to engage with senior investment professionals, alongside regulators and provided a unique perspective of market intelligence at work.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.