« McEwen's return to court needs explanation, Fri., Oct. 27, 2006, 1:30 PM | Main | The "D" word pops up, Fri., Oct. 27, 2006, 2:03 PM »

October 27, 2006

Merrill Lynch says Fed to keep rates high for longer, Fri., Oct. 27, 2006, 1:50 PM

David Rosenberg of Merrill Lynch, who is a Wall Street economist I think is at the top of his game, says "unforeseen developments in US energy markets have caused us to tighten up our interest rate outlook for the year 2007."

Rosenberg goes on to say: "The principal changes to (our) outlook are that we now expect the Fed's easing cycle to commence at the 21 March 2007 FOMC meeting (previously the 31 January 2007 meeting), and we predict the rate cutting cycle may be more ‘measured' over the course of 2007 " possibly pushing some rate reductions into the year 2008."

Clearly, Rosenberg is focused on inflation. Download ML's Rosenberg review of 2007 interest rates.

If true, this is not good news for the U.S. housing and auto industries in crises.

Quickly sliding GDP plus interest rates that have to stay higher for longer adds up to Stagflation.

There I go again.

Posted by Posted by Bill Cara on October 27, 2006 01:50:26 PM | Category: Bonds , Economics

Discourse

The Capital Spectator recently interviewed David Gitlitz, the chief economist for TrendMacrolytics. While Gitlitz does not see a recession ahead for the U.S., he does anticipate core CPI in the vicinity of 3.5 percent next year:

http://www.capitalspectator.com/archives/2006/10/the_future_acco.html

Posted by: JIM [TypeKey Profile Page] at October 27, 2006 4:01 PM [link]

Post a comment

Thanks for signing in, . Now you can comment. (sign out)

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)


Remember me?