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fed could ease off of Full Hawk a little earlier than what we think I know exactly Melissa the FED has been so um hawkish with their forward guidance it's already removed the rate hike expectations so right now with only four months left and 22 we have a 131 basis points of hikes priced in so set another way the FED has to hike 131 basis points just to meet expectations is the Fed going to do a pivot like the Boe did and I just don't anticipate that happening Nicole but if I look back at historically how the FED has acted when they've raised rates and they've held them at Peak levels historically they've held them at Peak levels for about eight months or so reactions continue to Trail the bank of England's move to Pivot from constrictive policies aimed at bringing inflation down to now stimulating the economy towards higher liquidity this move was necessary to save the Pension funds of England because the bonds they held lost about half their value in just a few days this historic intervention would last about two weeks in which the Boe would purchase as many long-dated bonds as possible to save the UK bonds Peter Schiff who has always shown his support for constrictive monetary policies expresses fears of what is to come if the U.S fed should go the path of the bank of England despite the UK's inflation being worse than the United States the UK seems to be taking less drastic steps to check Rising prices instead its apex bank is rolling out policies that are Catalyst to inflation in July the UK's inflation rate broke the two-digit glass ceiling at 10.1 percent up from its previous months 9.4 percent this is the highest it's been since February 1982 while the US recently raised rates by 75 basis points the UK only raised rates by 50 basis points taking its rates up to 1.75 this is the highest rates hike the UK has seen since 1995.
the bank of England folded they pivoted they decided to launch a new QE program remember yesterday they were committed to quantitative tightening now they said they will buy whatever it takes they have now committed to another QE Infinity in order to prop up the bond market they now have to print British pounds to buy these guilds and so instead of fighting inflation which yesterday was Public Enemy Number One it had to be brought down at any cost now all of a sudden when you see the cost well forget about that we're now going to create inflation because that is what the bank of England is doing they are now creating inflation now they went out of their way to try to hide behind what just happened by saying well this is not a monetary policy decision meaning we didn't decide to do it because we wanted to we had to to avoid a crisis but of course it is a monetary policy decision because that's the only policy they made is monetary policy deciding to launch QE is monetary policy I don't care what you want want to pretend that's what it is now the bank of England also said that the reason they're doing it is that they just want to maintain an orderly Market well you can't fight inflation and maintain an orderly Market because the markets have been propped up by inflation so if you're going to fight inflation you better be prepared for a disorderly market and until yesterday the bank of England was bluffing that they were but now that their Bluff has been called they've had to show their cards and they're holding nothing and so inflation one the British people now have got to accept reality that inflation is here to stay not just regular inflation but extremely high inflation it's not going to go away the bank of England has already made that choice the question is what about the other central banks in particular what about the Federal Reserve is the Federal Reserve when confronted with the same situation will they make a different choice then the bank of England Mr Schiff believes that the recent easing of UK's Central Bank is an admittance of defeat the bank had earlier predicted inflation to reach 13.3 percent in October and its move to print about 70 billion pounds to purchase guilds is certainly going to accelerate inflation on the other side of the pond many economists are of the opinion that the U.S has put its worst inflation behind and the rates would only go down from here this is against the backdrop of year-on-year rates going down from 8.7 to 8.5 in the most recent CPI release does the Federal Reserve have more Integrity are these guys willing to allow a financial crisis because the same thing is going to happen here we've got all sorts of Leverage in our markets we've got a bigger debt bubble than the British it's just that the Day of Reckoning for us is not going to come as early as it did for them because the dollar is going up it's not going down like the British pound it's going up because America is benefiting from every everybody else's problems even though America has bigger problems than everybody else we're still benefiting from all the problems because the dollar is the reserve currency and the dollar is thought of as a safe haven so when you're having problems in the UK you buy dollars the fact that the US has even bigger problems than you well that doesn't matter the trade is there's a problem in the UK by dollars there's a problem in the Eurozone five dollars there's a problem in Japan by dollars yes there's a problem all over the world the biggest problem is in America but nobody bothers to figure that out unlike the UK the US is Basking in the strengthening dollar the dollar is not relenting on its upward trajectory the Euro which has the strongest Weighing on the dollar at 57 percent has been pushing the value of the dollar up due to the high inflation in Europe the Yen with its 14 weight and the British pound sterling at 12 percent of the FX Market are also boosters to the dollar as their economy is grown under even higher inflation the dxy index pits the dollar against other currencies in such a way that the strength of the dollar can be quickly determined without having to look at the individual components the dxy reached a low of 71.00 in 2008 due to the global financial crisis which was caused by the US in 2020 the dollar started a major rebound because it became a safe haven currency this took the dxy to 103.80 in March of that year the dxy chart currently hovers at a high 110 range and is likely to go even higher as inflation is expected to dip in the U.S but possibly rise in other economies they made the exact choice that I would have expected them to make and they made the exact choice that I do expect chair palwame I don't care how much he wants to bark about being tough on inflation at the end of the day he will not bite the FED is a paper tiger and it will fall just as quickly as the bank of England when they're confronted with an actual crisis sure as long as stocks are still relatively High as long as unemployment is still low as long as housing has it imploded as long as we haven't had a major economic event a financial crisis maybe a big increase in unemployment as long as the FED can pretend everything is okay then it could pretend it's willing to accept minimal pain in order to deal with inflation but with its maximum pain then defend will not have the stomach for that it's going to go back to quantitative easing just like the bank of England and of course the bank of England is probably going to stop raising interest rates and the FED will do the same thing in fact there's already indications right now with the buffer of a strong dollar and gains in getting inflation under control the FED May indeed be tempted to reverse its monetary policies and cut interest rates this move will be to save a constricting economy get the assets Market active once again and put on employment under check whichever way there is much to lose and much to gain either way the FED chooses to go please take a minute to subscribe to this channel like this video and let's have your comments below thanks for watching
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