Will Yellen raise rate on WED 15 March

[ffoorr]

I think she will raise rate, at least 0.25 %

[anurag bhargava]

Without any doubts

[ffoorr]

What will Yellen do on next FOMC meeting ?

We saw on the 15 of March that the market has reacted has if instead of a Higher rates, we had a lower rate,

 The market expected a rate increase of 0.5% and not of 0.25, so it reacted has on a lowering of rate.

So on the point of vue of the market, Yellen did not raise rate enough.

But now everything changed, the 10 yers bond was at 2.6%  on March 26, today it is at 2.2% .

This mean the market do not expect a new raise of rate.

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In the futur Yellen can raise rates in two ways:

The first is the usual way to raise the rates, by increasing the basic FDD rate.

But she could also choose to resell the mass of the TBonds that the FED bought in order to have interest rates dropped.

That is, she could do the opposite of QE. Part of the QE was to buy the Treasury Bond, to lower interest rates.

(In the same way that by buying an action, it is made to rise, and thus to reduce the yield)

If Yellen want to raise interest rates, she could sell the TBond, so rate could go up.

She should do so before the TBs fall too low, otherwise the Fed would lose money on the resale of these TBonds.

).

It is a hypothesis to consider, instead of a rise of the DFF rate, a resale of the TBonds ?

(Treasury Bond at 10 years, Monthly

[ffoorr]

Beige book will give indication tonight.

Follow FED data here : https://donneeseconomiques.wordpress.com/

Follow this green line, it will one day go down:

U.S. Treasury securities held by the Federal Reserve: All Maturities     (TREAST)

https://fred.stlouisfed.org/graph/?graph_id=132191&category_id=7972