Fed to European Central Bank: So What?
Just because the European Central Bank raised interest rates today to stave off inflation, don't expect the Fed to take a similar tack with U.S. rates, these strategists say.
European Central Bank President Jean-Claude Trichet cited oil prices as a key factor in the decision to raise rates. But the Fed follows other, less volatile indicators, say Steven Ricchiuto chief U.S. economist at Mizuho Securities USA, and Zane Brown, fixed income strategist at Lord Abbett.
The sit is whether or not those increases in food and energy propagate out through the system." and sow inflation, and the weak economy will make that very difficult, Ricchiuto said. Then there is the fact that Brown pointed out - that the Fed looks only at core inflation, which is both less volatile and lower. All in all, they said, the Fed is highly unlikely to be influenced by the ECB's move. And that can't be good for the dollar.
Take a look, right here.
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