Technical & Fundamental Oil Reports Specialists

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Stick or twist?

Published Wednesday, March 18th, 2015

It’s a big day in the UK with the Chancellor delivering his pre-election budget. A big day domestically that is, but of little significance globally unless you think that it will deliver a sequence of events that runs as follows:- Tories win an outright majority in May leading to a referendum on UK membership of the EU in 2016 which leads to exit and sets up a train of referendum demands in other member countries.

Far more important for the global economy is the result of the Federal Reserve’s latest monthly meeting which ends today. More accurately it is the words surrounding the announcement which matter, as the interest rate will not be changed.

Will the Fed stick with the word patient or twist with new vocabulary? Retaining patient implies an autumn interest rate increase, twisting brings the odds forward to summer or so the market thinks. That so much is resting on such a seemingly small distinction demonstrates both the nervousness and alarming fragility of the financial markets.

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Posted by David Hufton