The stock market held near record levels and interest rates were stable after the Federal Reserve (Fed) announced its much anticipated plan to shrink its balance sheet last week. Despite concerns about the impact of Fed interest rate increases on the long term economy and inflation outlook, the Fed took a constructive view of the dynamics impacting the economy. As a result of the relatively hawkish tone, the odds of a December rate hike increased. I still believe the Fed will hold off on increasing rates until 2018.
Central banks will again be in the news this week as policy makers from the Fed, ECB and BOE all give remarks. I expect the markets to continue to trade range bound into quarter end.
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