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Weekahead: markets on Fed alert

Sunday, December 11, 2016 - 01:37

Just how fast the Federal Reserve hikes rates next year will be the all-important question global investors will be hoping to get answered when the U.S. central bank meets next week. But, as Ciara Lee reports, IMF chief Christine Lagarde may also come under close scrutiny as she goes on trial.

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It's finally here - not Christmas - but the U.S. Federal Reserve's December meeting. It's widely expected to raise interest rates for the first time this year, with markets already pricing in the move. But it may take a cautious view on the economy. Traders will now turn their attention to the Fed's projections for any change in tone following Donald Trump's surprise election in November. Trump's victory increased market expectations of greater fiscal stimulus that could boost economic growth and inflation. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "I actually don't think it's anymore a question of whether they will hike in December. It's much more a question of around the path they guide to in 2017. My own view is that they will struggle to push out more than one rate hike next year with the dollar as strong as it is. But markets are pricing three and maybe the Fed prices them again at four which they did for 2016, and they still haven't hiked as we stand here today." The Bank of England is also set to meet, but few expect any changes to rates, though all eyes will on its outlook for post-Brexit vote Britain. And IMF Chief Christine Lagarde will also come under some close scrutiny. She goes on trial for her role in a 400 million euro payout to businessman Bernard Tapie in 2008 when she was France's finance minister. The case has cast a rare shadow over Lagarde, who is widely respected in policy circles. She helped the IMF turn over a new leaf after her predecessor Dominique Strauss-Kahn resigned in 2011. Lagarde is accused of negligence for signing off on a highly unusual out-of-court settlement.

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Weekahead: markets on Fed alert

Sunday, December 11, 2016 - 01:37