As widely expected we have just seen the Fed move again - raising its Federal Funds target interest rate to the range of 0.5-0.75%. What does this mean?
Big tax cuts and increased defence and infrastructure spending will provide an initial fiscal stimulus, but the the risk is that Donald Trump's protectionist policies will set off a trade war.
While a constant concern since the GFC has been that easy monetary policies would cause surging inflation, it hasn't occurred. But what if we end up with sustained deflation instead?
Changes in value of the Aussie dollar can have a big impact on investment portfolios, with the huge rise in the $A over 2001-2011 now going into reverse.
Expect the official cash rate, currently 2.5%, to have increased to 3% by year's end.
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