"We do have some potential for that today because the Fed funds futures path - the market based one - is a lot lower and shallower than the Fed's actual (summary of economic projections)."
- James Bullard, St. Louis Fed President
According to the President of the Federal Reserve Bank of St. Louis James Bullard, markets should expect a greater volatility due to uncertainty over the Fed's future monetary policy decisions, especially when coming closer to the eventual increase of the federal funds rate. The same situation has already been observed in 2013, when the Fed decided to taper its bond purchases. It caused US Dollar's significant rise, growing yields for US Treasury's bonds and uplifted volatility on stock markets, while Mr. Bullard predicts it may happen again in the foreseeable future. Besides that, the St. Louis Fed's President has separately underlined strength of the American currency. He said that the European Central Bank's recent aggressive monetary policy decisions may have more influence on the Greenback's exchange rate than expectations of the Fed's rate hike. Along with that, he added that it is currently hard to predict, in which direction the euro-dollar exchange rate might go in the future.
Among other news on Monday, US existing home sales showed a worse-than-forecasted result for a fourth time in a row in February. Despite that, sales rose 1.2% to 4.88 million on the annualized basis during the previous month, up from the 8-month low of 4.82 million seen in January when they slipped as much as 4.9% on a monthly basis.
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