Yesterday, IMF President Christine Lagarde said the Fed should hold off on hiking interest rates until 2016. Apparently Ms. Lagarde and her Keynesian brethren who dominate global policy circles, are so terrified of a 0.25% interest rate hike that they dream up reasons to delay the day of reckoning. Ms. Lagarde justified her policy call by saying inflation is too low and there are “significant uncertainties as to the future resilience of economic growth.” Seems an odd sentiment considering how ineffective Fed policy has been at driving strong growth in the U.S. over recent years.
Hopefully Ms. Lagarde doesn’t have Fed Chair Yellen’s attention. For if there is one policy body that is more often behind the curve than the Fed, it is the IMF.
The bond market is certainly not paying attention to the IMF. A better than expected jobs number this morning has pushed up 2-year treasury notes, those most closely tied to Fed policy to a new high for the year.
Jeremy Jones, CFA
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