According to the Bank for International Settlements, Forex traders, investors and other market participants underestimate the chances of central banks raising interest rates over the next couple of years. If the projections made by the BIS manifest themselves, major central banks representing the world's biggest economies may face some major challenges associated with interest rates in the near future, Market Leader reports.
According to several sources, including WSJ, the BIS has calculated approximate interest rate targets from major central banks. The calculation was based on Taylor's rules. Those rules are basic and simple. They make it possible to project future key interest rates based on current economic tendencies and inflation rates.
According to the calculation results, the Fed's interest rate may reach 2,75% by late 2015.
At the same time, the average forecast made by the Fed's representatives is 1,68% in late 2015. As for the UK, the implied Taylor-rule-based interest rate is expected to reach 2,5% - underestimated by nearly 2%. The ECB and BofJ's expected interest rates are underestimated by 0,7% and 1,8% respectively.
According to the Bank for International Settlements, Forex traders, investors and other market participants underestimate the chances of central banks raising interest rates over the next couple of years. If the projections made by the BIS manifest themselves, major central banks representing the world's biggest economies may face some major challenges associated with interest rates in the near future, Market Leader reports.
According to several sources, including WSJ, the BIS has calculated approximate interest rate targets from major central banks. The calculation was based on Taylor's rules. Those rules are basic and simple. They make it possible to project future key interest rates based on current economic tendencies and inflation rates.
According to the calculation results, the Fed's interest rate may reach 2,75% by late 2015.
At the same time, the average forecast made by the Fed's representatives is 1,68% in late 2015. As for the UK, the implied Taylor-rule-based interest rate is expected to reach 2,5% - underestimated by nearly 2%. The ECB and BofJ's expected interest rates are underestimated by 0,7% and 1,8% respectively.
