Interest Rates Calendar

ECB - A fairly neutral statement
Overview: The ECB held leading interest rates unchanged and made a fairly neutral statement at today's press conference. That said Mr Trichet did make a few remarks which were less hawkish than expected by markets. The market response was a moderate decline in yields. The new ECB projections did hold a downward revision of the growth forecast and upward adjustment of the inflation forecast. Our expectation is for ECB to be on hold on a 12 month horizon. We believe the market will price in<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=fB1wL"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=fB1wL" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=OURVL"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=OURVL" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=5wNBl"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=5wNBl" border="0"></img></a> </div>

ECB: Preview of meeting on September 4
Overview: We expect the European Central Bank to hold rates unchanged. Focus is therefore on how the ECB portrays the economic situation at the press conference. We reckon that the ECB will adopt much the same tone as at the previous meeting - i.e. not to fuel market expectations of changes in rates. Thus Trichet is expected to deliver a quite neutral statement with a repeat of the key policy phrase signalling that current rates are appropriate. However, if anything, we see the chance of a<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=n2AWoL"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=n2AWoL" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=jUHgML"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=jUHgML" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=D7cfml"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=D7cfml" border="0"></img></a> </div>

FOMC Minutes of August 5th
* Base scenario includes a slowdown throughout 2008 and relatively high (although temporary) inflation rates * Members gave equal weight to growing growth and inflation risks * The minutes explicitly mentioned that the Board expects the next interest rate move to be a rate hike. But did not commit to such move anytime soon The minutes for August’ FOMC meeting reinforced the views we expressed in our last Fed Watch. The Fed has purposely stirred from its July’s message, time when it expressed<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=KmNzvK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=KmNzvK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=1fOJDK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=1fOJDK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=HlSIGk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=HlSIGk" border="0"></img></a> </div>

FOMC: Continued wide disagreement
Overview : The minutes from the August 5 monetary policy meeting were released last night at 20:00 CET. Compared to the meeting statement and the recent Fed communication the minutes did not reveal much new information. However, the disagreement within the committee remains wide; the general impression from the minutes is that the monetary policy will remain on a firm hold for now. Given this 'well-anticipated' message the market reaction was generally muted, with the Treasury curve moving<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=YPOKxK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=YPOKxK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=j9GosK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=j9GosK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=lDgJNk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=lDgJNk" border="0"></img></a> </div>

Hungary: Balanced central bank in wait-and-see mode
As both we and the consensus expected the Hungarian central bank (MNB) today left its key policy rate unchanged at 8.50%, the third successive meeting at which they have remained so after a total of 100bp in hikes since March 2008. As the following statement shows MNB was fairly balanced in its comments. In particular it said: "The monetary council sees subdued growth and slow disinflation in 2010, in line with the forecasts presented in the new inflation report. According to the base case<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=2BTl5K"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=2BTl5K" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=DckLFK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=DckLFK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=15K4nk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=15K4nk" border="0"></img></a> </div>

Japan: Rates unchanged, slightly softer view
The Bank of Japan (BoJ), as expected, left its leading O/N target rate unchanged at 0.5% in a unanimous decision at today's monetary meeting. BoJ's "View of the Economy" and the press briefing was slightly soft but overall there were only minor changes compared to the July view. Looking more closely at the details, there were only minor changes in the BoJ "View of the Economy", now released as part of the policy statement. The August statement "economic growth has been sluggish" has replaced<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=3RZr3K"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=3RZr3K" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sO5uuK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sO5uuK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=OvMeHk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=OvMeHk" border="0"></img></a> </div>

Norway: Balanced central bank, but inflation is still main focus
News from Danske ResearchNorges Bank kept as widely the policy rate unchanged at 5.75% at today's monetary policy meeting. The press release was very balanced. Norges Bank says that weak growth abroad counterbalances higher inflation in Norway. As widely expected, Norges Bank kept its policy rate unchanged at 5.75% at today's monetary policy meet-ing. Hence, all focus was on the accompanying press release and the press briefing.<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=zyypmK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=zyypmK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=D92UuK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=D92UuK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=9uetLk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=9uetLk" border="0"></img></a> </div>

BoE August Inflation Report shakes markets
The Bank of England (BoE) released its August Inflation Report at 11.30. As expected, the BoE revised its growth path downwards and the inflation path upwards compared to the May Inflation Report. Although such revisions were expected in general, markets were surprised how negative the report was and also how downbeat BoE Governor Mervyn King was at the following press conference. The BoE now predicts CPI inflation to peak at 4.9% in Q3. The BoE notes that the inflation outlook is unusually<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=3ylzKK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=3ylzKK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=SGacwK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=SGacwK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=v2gYBk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=v2gYBk" border="0"></img></a> </div>

ECB and the Euro
The currency debate between the euro and the US dollar has shifted topic. It is no longer about the rate policy of the ECB and the Federal Reserve, both banks are on long term hiatus. It is not primarily about the US economy which though weak has not collapsed and has been a story for many months. The debate is now about the economic health of the Eurozone and it is brought to the market courtesy of Jean Claude Trichet the President of the European Central Bank. It is a debate the Eurozone and<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=XtuSjK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=XtuSjK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ZaDQYK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ZaDQYK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=fCeKmk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=fCeKmk" border="0"></img></a> </div>

Czech Republic: CNB reacts to (too?) strong CZK
The Czech central bank (CNB) today cut its key policy rate by 25bp to 3.50% - this was in line with our expectation, but contrary to consensus forecasts. Although the consensus was looking for unchanged rates, a large minority (including us) had anticipated a cut - so it was not a totally unexpected move today.<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=LpFUmK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=LpFUmK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=HkNHGK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=HkNHGK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=UG4xtk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=UG4xtk" border="0"></img></a> </div>

ECB: Preview of meeting on August 7
Overview : We expect the ECB to hold rates unchanged and deliver a quite neutral statement with a repeat of the key policy phrase signalling that rates are appropriate currently. There is a chance of a dovish twist, though, as the ECB may - unwillingly - have to acknowledge rising downside risks to growth on the back of the recent very weak numbers out of Euroland - and in particular Germany. We believe the ECB will be careful not to sound too dovish, though, as it does not want to fuel<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=4hq5SK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=4hq5SK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=VYETVK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=VYETVK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=t99lKk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=t99lKk" border="0"></img></a> </div>

FOMC: Firmly on hold
Overview : Yesterday evening, the Federal Open Market Committee (FOMC) decided to keep its policy rate unchanged at 2%, as widely expected. Unsurprisingly, one member, Dallas Fed Governor Richard Fisher, voted against the decision, preferring an increase in the fed funds target. The statement saw only minor changes. If anything, it was slightly more balanced, putting growth and inflation concerns on a more equal footing compared to the previous meeting. The general message remains that the<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=KzG9oK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=KzG9oK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=9E1ImK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=9E1ImK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=GDLHCk"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=GDLHCk" border="0"></img></a> </div>

FedWatch: FOMC Meeting August 5th
FOMC Meeting August 5th The Fed maintained its target rate at 2%. It also reiterated its concerns regarding both growth and inflation risks. The FOMC backtracked from its previous assessment on growth. It recognized that GDP has been better than expected, but it now underlined continuing risks to growth. As expected, the balance of risks was rendered as balanced, with no suggestion of any rate change for the near future<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=bU32IK"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=bU32IK" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=l1NC8K"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=l1NC8K" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=L90a9k"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=L90a9k" border="0"></img></a> </div>

FOMC Minutes of June 24-25
• Members recognized that risks to growth persisted and that risks to inflation had risen • Less consensus on risk assessments. All members saw rising risks, but some viewed the balance of risks tilted towards inflation. • The Board is managing growing uncertainty about the outlook, thus justifying a “wait and see” policy. One day after Bernanke's testimony in Congress, The Fed released the minutes for last month's FOMC meeting. As it was expected after the hawkish statement that accompanied<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ERXxyJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ERXxyJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=5qkCBJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=5qkCBJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=vsQC1j"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=vsQC1j" border="0"></img></a> </div>

Semiannual Monetary Policy Report to the Congress
• Fed assistance to Fannie and Freddie is temporary, while Congress decides how to proceed • Bernanke indirectly supported Congress proposal to help households facing foreclosure • Rising uncertainty for both future growth and inflation. FOMC will assess incoming information as it becomes available Bernanke testified before Congress amid growing concerns about the financial condition of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Bernanke assured Congress that the<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=t4OYGJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=t4OYGJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=1iNAfJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=1iNAfJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=lL04Hj"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=lL04Hj" border="0"></img></a> </div>

First Line of Defense: Hawkish Wording
• The Fed maintained its target rate at 2%. But the statement was hawkish in tone, in line with recent speeches of Board members • FOMC is now more concern with risks to inflation than with risks to the growth outlook • While we expect a pause in its next meeting August 5th, the Fed will not hesitate to act if inflationary pressures increase further or if inflation expectations continue to deteriorate Inflationary Risks continue to rise, while growth drags. The Federal Open Market Committee<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=pgQRzI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=pgQRzI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=MV6fiI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=MV6fiI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=wnlJMi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=wnlJMi" border="0"></img></a> </div>

Making Sense of Increased Hawkishness
• Pressures to both growth and inflation persist • Lower marginal benefits of further rate cuts and higher inflation risk point to a prolonged pause • Fed will keep its options open In its next meeting the FOMC will probably maintain rates at 2%. After pursuing aggressive rate cuts for the last 10 months, we expect this to be the first meeting where the FOMC keeps rates constant, thus suggesting a floor in the current interest rate cycle. The expected pause should not be interpreted as the end<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=aJz7oI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=aJz7oI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=iYQfDI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=iYQfDI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=0Cucxi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=0Cucxi" border="0"></img></a> </div>

Bernanke's speech on the economic outlook
Bernanke signaled the Fed intention to end interest rates easing. “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate”. Bernanke remains alert, but feels more confident that financial instability is receding. “The resulting reductions in funding pressures, together with the increased confidence created by the assurance that<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=h2Sx2I"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=h2Sx2I" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=0yaaKI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=0yaaKI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sVB4Pi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sVB4Pi" border="0"></img></a> </div>

Minutes of FOMC Meeting, April 30th 2008
• The minutes showed that expectations for 2008 had deteriorated since the previous meeting. Participants lowered their forecast for GDP growth in 2008 while revising up sharply their outlook for inflation • FOMC members expected a recovery in 2009, but admitted that downside risks to the outlook were significant. Risks to growth were linked to the enduring strains in the credit market, while risks to inflation were mainly associated with changing expectations • As long as their new base<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=pR4wCH"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=pR4wCH" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sDJV5H"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sDJV5H" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=7ZxF3h"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=7ZxF3h" border="0"></img></a> </div>

Increasing Liquidity Provisions
The Fed increased liquidity provisions to financial institutions yet again. This measure -- that comes as response to the markets’ pressing request for funding -- underscores the Fed continuing concern with the vulnerability of the financial system. Today’s measures reinforced all three of the Fed innovative instruments to manage the current turmoil: Term Auction Facilities (TAF), Term Securities Lending Facilities (TSFL) and temporary reciprocal currency arrangements with other central banks:<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=9omK5H"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=9omK5H" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=YhduOH"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=YhduOH" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=qfrX3h"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=qfrX3h" border="0"></img></a> </div>

FOMC Meeting, April 30th 2008
• The Fed lowered its target rate by 25 basis points to 2%. The statement acknowledged a weakening trend in business spending.  • FOMC appears to be more concern with inflation and inflation expectations • While we do not expect further cuts in their next meeting on June 24th/25th, the Fed left its options open. Growth and Inflationary Risks Are Becoming More Balanced The Federal Open Market Committee announced today a 25 bp cut on its target for the federal funds rate, which now stands<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=AOAOxH"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=AOAOxH" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=uvPdsH"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=uvPdsH" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=TYnwSh"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=TYnwSh" border="0"></img></a> </div>

FOMC April 29-30 Meeting
• Additional pressures on inflation • Lower marginal benefits of further rate cuts • However, Fed will keep its options open In its next meeting FOMC will probably reduce rates by 25bp. This move would take rates down to 2% confirming a deceleration in monetary easing that has gone from 75 bp cut in January, to 50bp cut in March, to our expected 25 bp cut at the end of April. Two factors justify this strategy: 1. The inflation theme has reappeared in recent speeches this month. Governor Warsh<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=8jPcsiG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=8jPcsiG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=02RiGRG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=02RiGRG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=S9kkqZg"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=S9kkqZg" border="0"></img></a> </div>

FOMC Minutes March 18th Meeting
• Fed more worried on downside risks to growth • Strains in financial markets continued to pose significant uncertainty to the economic outlook • We expect further monetary policy easing FOMC more pessimistic on economic activity FOMC minutes continued to reflect a more pessimistic view on economic activity and increased downside risks to growth. According to the Fed: • The contraction in homebuilding intensified • Consumer spending appeared to be weakening • Industrial production fell in<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=cav0pWG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=cav0pWG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=qy5BllG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=qy5BllG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sdNE5Pg"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sdNE5Pg" border="0"></img></a> </div>

FOMC Meeting, March 18th
• The Fed lowered its target rate by 75 basis points to 2.25%. The statement continued to stress the downside risks to growth, acknowledging higher uncertainty on the inflation side • The outlook remains fraught with danger, recognizing the deterioration of credit conditions and the overall economy since their last scheduled meeting in January 30th • FOMC was more pessimistic regarding inflation. It recognized that inflation expectations have risen, adding more uncertainty to the inflation<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sWzCEZG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sWzCEZG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=QFD4rrG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=QFD4rrG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=G5n6ihg"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=G5n6ihg" border="0"></img></a> </div>

Ben S. Bernanke testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate
• Bernanke indicated that downside risks to growth have increased and conditions in the labor market have softened • Bernanke’s baseline outlook involves a period of sluggish growth in the first half of 2008 • The speech is consistent with our current expectations of a 0-25 bp cut in the next FOMC meeting The Fed Chairman’s speech did not change drastically from his previous intervention in front of the House of Representatives budget committee last month. The market was expecting a more<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=4ySMEgG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=4ySMEgG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=aJrPgCG"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=aJrPgCG" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=i3CxTUg"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=i3CxTUg" border="0"></img></a> </div>

FOMC January 29-30, Meeting
· In a decision anticipated by the market, the FOMC cut the fed funds rate by 50 basis points to 3.0 percent · FOMC members stressed that the uncertainty surrounding the outlook remains, and inflation expecattations seem to be well anchored · Overall, we believe that future rate cuts depend heavily on the pace of economic activity There are considerable downside risks to economic growth and there has been no improvement since the last FOMC scheduled meeting in December. In the press release<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=2cCU1I"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=2cCU1I" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ycxUuI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ycxUuI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ZfEN2i"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ZfEN2i" border="0"></img></a> </div>

Federal Open Market Committee, January 29-30
· The Fed is willing to act decisively to maintain orderly functioning in financial markets, and thus lower the risk of a sharper slowdown in economic activity · As a consequence of this strategy, FOMC will continue lowering the fed fund rates in the coming months The FOMC lowered the fed funds rate by 75 bp last Tuesday, in a “decisive” action that could have been in the cards during the meeting ending on January 30, as the economic outlook deteriorated in previous months and “appreciable<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=RharJI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=RharJI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=9YjWyI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=9YjWyI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=VOqodi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=VOqodi" border="0"></img></a> </div>

FOMC meeting outside the regular schedule
· The action taken by the FOMC is the more aggressive rate cut, in a single move, since October 1984 · Today’s rate cut is a response to the ongoing deterioration on financial market conditions and credit tightening for some businesses and households · Risks to the short-term economic outlook are clearly tilted towards the downside · The Fed’s action was approved with eight votes in favor and one against The Fed’s emergency interest-rate cut, one week before their scheduled meeting, was aimed<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ToPrEI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ToPrEI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=XRQgYI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=XRQgYI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=6fkLAi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=6fkLAi" border="0"></img></a> </div>

Fed Open Market Committee, January 17
Ben S. Bernanke testimony before the committee on the Budget, U.S. House of Representatives · Bernanke indicated that the baseline scenario for economic activity has worsened and the downside risks to growth have increased · The speech is consistent with our current expectations of a 25-50 bp cut in the next FOMC meeting · The Fed supports the rapid implementation of temporary measures to stabilize economic activity, which includes a fiscal stimulus package Mr. Bernanke indicated that the Fed<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=bjOnZI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=bjOnZI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=XJvcyI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=XJvcyI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=xIJygi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=xIJygi" border="0"></img></a> </div>

Interbank Interest Rates Fall as Central Banks Succeed in
Yesterday, the European Central Bank pumped in a record $500 billion into the financial system which resulted in a record drop of 0.5% in the 2 week euro interbank LIBOR rate. The Bank of England similarly pumped in $10 billion at substantially lower interest rates than the interbank rate of 6.53%, the bulk of which was auctioned to bidders at the minimum rate of 5.36% which is below the base interest rate of 5.5%. This resulted in the rate dripping yesterday to 6.38% and today to 6.20%<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=d6jRfI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=d6jRfI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=312zUI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=312zUI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=9bWpWi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=9bWpWi" border="0"></img></a> </div>

Fed Open Market Committee, December 11
· Risks to economic growth have increased substantially · The probability of more rate cuts is higher · We expect a 25bp rate cut in the next FOMC meeting The FOMC decided on October 31 to cut the fed fund rate as well as the discount rate by 25 bp. Following that decision, members seemed to have a neutral stance with respect to the economic outlook. As they expressed in the rate decision, “the upside risks to inflation roughly balance the downside risks to growth.” This assessment was to some<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=BLBF9I"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=BLBF9I" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ogNbKI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ogNbKI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=QfjUni"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=QfjUni" border="0"></img></a> </div>

Fed Open ed Market Committee, October 30-31st
In his speech at the HEC-Montreal International Transmission and Macroeconomic Policies Conference, Fed Governor Frederic Mishkin discussed the advantages of using monetary policy rules that focus on core inflation rather than headline inflation, mainly because of the inherent volatility of this indicator. In our interpretation, if monetary policy focuses on headline inflation it will not only increase overall price level volatility but it will induce employment volatility as well. For<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=dJ3wfI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=dJ3wfI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=YsBXyI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=YsBXyI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=RuXZCi"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=RuXZCi" border="0"></img></a> </div>

FOMC September 18th Meeting
· The uncertainty about future developments in the economy implies, to some degree, a higher uncertainty as whether or not further cuts will be necessary · Inflation appears to be contained, at least in the short term, and the readings on core inflation continued to be favorable Members of the FOMC recognize the “unusual nature” of the current financial shock by expressing their concerns regarding the validity of current economic data as a gage of economic activity. The depth of the negative<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=ZKBcgI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=ZKBcgI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=IvX91I"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=IvX91I" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=VKxG1i"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=VKxG1i" border="0"></img></a> </div>

FOMC September 18th Meeting
The FOMC cut the fed funds rate by 50 basis points to 4.75% and lowered the discount rate by the same amount The statement shows concern about the potential impact on growth of tightening credit conditions, the disruption in financial markets and the ongoing housing correction Unless conditions improve in the near future, which is not likely, the FOMC could lower rates to 4.25% by the end of the year Prior to the meeting there was uncertainty as whether the FOMC would implement a 25 or a 50 bp<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=eZxhLI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=eZxhLI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=DLYBLI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=DLYBLI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=Pxf8Ai"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=Pxf8Ai" border="0"></img></a> </div>

FOMC August 7th Meeting
No significant changes to next week’s statement Hawkish sentiment will continue Fed funds rate will remain at 5.25% Economic trends on track to meet the recently adjusted FOMC outlook We do not expect any significant changes to the statement as economic performance matches Fed’s expectations. Data suggest that FOMC growth outlook of “a little below” potential for 2H07 and then rising in 2008 to a pace “broadly in line with potential output growth,” is likely to occur. Thus, the below average<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=47KZYI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=47KZYI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=KT8INI"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=KT8INI" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=BbJ6Ni"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=BbJ6Ni" border="0"></img></a> </div>

FOMC Minutes June 27th/28th Meeting
Risks to economic growth “more balanced” Inflation level is “favorable” but moderation trend is not yet convincing Fed funds target will continue to be 5.25% “More balanced” risks to growth while upside risks to inflation persist According to the FOMC minutes, “Risks to growth were more balanced than at the time of the May meeting.” The balance primarily stems from the improvement in business spending data that was available between the May and June meeting. Moreover, members anticipate<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=N07OWJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=N07OWJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=H2CQlJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=H2CQlJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sQwSej"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sQwSej" border="0"></img></a> </div>

Testimony of Chairman Ben Bernanke Semiannual Monetary Policy Report to Congress
Fed’s forecast for 2007 and 2007 GDP growth is revised downward Core inflation still “predominant policy concern” The testimony is consistent with the federal funds target remaining at 5.25% Despite GDP downward revision, the Fed is still positive about future growth Bernanke noted that “after having run at an above-trend rate earlier in the current economic recovery, U.S. economic growth has proceeded during the past year at a pace more consistent with sustainable expansion.” This<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=iVJIiJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=iVJIiJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=yPMmCJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=yPMmCJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=BbLAwj"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=BbLAwj" border="0"></img></a> </div>

FOMC June 28th Meeting
FOMC will maintain 5.25% rate The statement will retain its implicit tightening bias It will likely address recent indicators of growth and continue concern over expected inflation moderation Paragraph on growth: this will likely adjust to acknowledge the recent indications of faster growth: continued strength of the business balance sheets, rising ISM, positive YoY growth for nondefense capital goods, low sales to investment ratio suggesting increased future investment, labor working more<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=mMxM7J"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=mMxM7J" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=K9FBeJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=K9FBeJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=jR9Omj"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=jR9Omj" border="0"></img></a> </div>

FOMC Minutes May 9th Meeting
Outlook for growth improves for 2008 Uncertainties for inflation remain elevated Fed rates will remain steady at 5.25% Outside risks to growth diminish while upside risk to inflation remain high Positive influences within growth outweigh negative risks, causing GDP growth for 2008 to be revised upward. During the previous meeting, the growth rate was given as “a rate a little below that of the economy’s long run potential;” however, May’s meeting saw growth being revised to “increase at a pace<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=pCzEMJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=pCzEMJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=B9SMdJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=B9SMdJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=sbrMcj"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=sbrMcj" border="0"></img></a> </div>

FOMC May 9th Meeting
Fed held the fed funds rate steady at 5.25%; made minor changes to the policy statement The wording remains hawkish: reiterated that inflation is the predominant policy concern Statement retains hawkish bias; signals that the Fed will remain on hold for several meetings The FOMC kept the fed funds rate steady at 5.25% for the seventh consecutive meeting. As we anticipated, there were changes in the paragraphs on growth and inflation; but more importantly, and also as we expected, the policy<div class="feedflare"> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=UqdigJ"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=UqdigJ" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=knd88J"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=knd88J" border="0"></img></a> <a href="http://feeds.fxstreet.com/~f/fundamental/interest-rates?a=yRS4Nj"><img src="http://feeds.fxstreet.com/~f/fundamental/interest-rates?i=yRS4Nj" border="0"></img></a> </div>