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Dudley Says September Hike Possible, Markets Too Complacent

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William Dudley

The Federal Reserve could potentially raise interest rates as soon as next month, New York Fed President William Dudley said, warning investors that they are underestimating the likelihood of increases in borrowing costs.

“We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further,” Dudley, who serves as vice chairman of the rate-setting Federal Open Market Committee, said Tuesday on Fox Business Network. Asked whether the FOMC could vote to raise the benchmark rate at its next meeting Sept. 20-21, Dudley said, “I think it’s possible.”

Investors expect about one rate hike between now and the end of next year, according to federal funds futures contracts, and they marked up probabilities only slightly on Tuesday. Dudley said such estimates are “too low” and that “the market is complacent about the need for gradually snugging up short-term interest rates over the next year or so.”

“We are looking for growth in the second half of the year that will be stronger than the first half,” Dudley said. “I think the labor market is going to continue to tighten, and in that environment I think we are getting closer to the day where we are going to have to snug up interest rates a little bit.”

The FOMC left interest rates unchanged when it met last month, but said in a post-meeting statement that “near-term risks to the economic outlook have diminished.” The Fed will publish minutes of that meeting Wednesday at 2 p.m. in Washington.

Atlanta Fed President Dennis Lockhart, also speaking Tuesday, said he’s confident growth is accelerating, setting the stage for one or two rate increases this year. He said he wouldn’t rule out one coming in September.

‘Serious Discussion’

“If the meeting were today, I think the economic data stream would justify a serious discussion of a rate increase,” Lockhart, who isn’t a voting member of the FOMC this year, told reporters after a speech in Knoxville, Tennessee. “Now we have more data to come in in the next few weeks before the meeting. We’ll see what that tells us. But I would not rule out September, at least for a serious discussion.”

While U.S. stocks rose to another record high on Monday, the New York Fed chief said he didn’t see any signs of asset bubbles that are “particularly disturbing.” At the same time, the bond market “looks a little bit stretched,” in part because major central banks are “creating a search for yield globally” through their bond-buying programs, he said. That demand is spilling over to the U.S., where Treasury yields are higher than in Japan, Germany and the U.K.

“The 10-year Treasury yield, at 1.5 percent, is pretty low in an environment where we think we are making progress towards our objective, we’re pretty close to full employment, we think inflation is going to trend back to 2 percent over the next couple of years,” Dudley said.

Brexit Risks

Even so, Dudley struck a cautious tone on the pace and ultimate amount of Fed tightening. He said near-term risks from the effects on financial markets of the U.K. vote in June to leave the European Union had diminished, but added that there were uncertainties about the longer-term economic impact and whether foreign central banks would be able to support global economic growth with negative interest-rate policies.

In the U.S., “there are reasons to think that monetary policy isn’t particularly stimulative right now, and you can sort of judge that by the fact that we only grew at a 1 percent annual rate in the first half of the year,” he said. “So we probably don’t have a lot of monetary policy tightenings to actually do over time.”

A Labor Department report released Aug. 5 showed two straight months of strong job creation in June and July following a tiny increase in May that raised worries about the health of the economy. The Fed’s preferred measure of inflation, which has been below the central bank’s 2 percent target for four years, has been slow to pick up.

“In my mind, the inflation outlook really hasn’t changed very much,” Dudley said. “The key question is: Are we going to get enough growth to put pressure on resources, pushing up wages and gradually pushing up inflation towards 2 percent? So far we seem to be on that trajectory.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Naira

CBN Will Redesign Naira Notes Every Five to Eight Years; Say Emefiele

The central bank will henceforth redesign the nation’s legal tender every five to eight years

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New Naira Notes

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the bank will henceforth redesign the nation’s legal tender every five to eight years.

The apex bank governor revealed at the unveiling of the new naira notes on Tuesday. 

Godwin Emefiele explained that the naira redesign is in line with global best practice noting that the naira needed to be redesigned and re-issued every five to eight years.

According to the CBN governor, previous administrations lacked the political will to approve the redesign of the naira notes. Stating that it is regrettable that the naira has not been redesigned for the past 19 years. 

“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” the CBN governor stated. 

Emefiele added that going forward, naira notes will be redesigned at intervals to address some peculiar issues. 

 “After today, the CBN will begin to redesign and reissue the naira every five to eight years,” he said. 

Investors King had earlier reported that President Muhammadu Buhari unveiled the redesigned naira notes at the Federal Executive Council (FEC) meeting today. 

Among those who joined the president with the unveiling include the CBN governor and the EFCC chairman.

Recall, in October, the CBN announced it will redesign the N200, N500 and N1,000 notes in line with its mandate.

Meanwhile, the CBN governor has disclosed that the new naira notes can not be counterfeited because of the features embedded in them. 

Similarly, he added that security agencies would be monitoring people making withdrawals at the counter to sniff out money laundering and unravel illegal usage. 

“The CBN has moved to a cashless economy. We will restrain the volume of cash someone will withdraw over the counter. We will follow up with the person’s data to know the reason for such withdrawal,” he concluded.

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Naira

President Buhari Unveils New Redesigned Naira Notes, See Pictures

Buhari launched the new naira notes as the CBN forges ahead with redesign plans.

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New Naira Notes

President Muhammadu Buhari on Wednesday unveiled the new redesigned Naira notes at the State House in Abuja following a series of sensitisation to ensure that Nigerians are aware of the deadline for the old notes.

New Naira Notes

Godwin Emefiele, the governor of the Central Bank of Nigeria, who was also present at the launching explained that the redesigned notes would help curb counterfeit, reduce hoarding and support the apex bank’s cashless policy.

Earlier in October, the central bank announced it was redesigning the N200, N500 and N1,000 notes in line with its mandate. The apex bank further stated that the newly redesigned notes would be available on December 15, 2022.

However, Emefiele later announced the central bank won’t wait until December 15th before unveiling the new notes on November 2023.

He said, “100 days is enough for any person from any part of Nigeria to deposit his money in the bank and get his money when the new notes are released.

“For information, indeed, we are no longer waiting till December 15th to unveil and begin to release the new notes.

“By the special grace of God, tomorrow, which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.”

New Naira notes

Meanwhile, the central bank-led monetary policy committee raised interest rates by another 100 basis points from 15.5% to 16.5%. Bringing the total increase in 2022 to 500 basis points despite the challenges Nigerians are facing amid weak job creation and poor earnings.

The committee claimed the decision was based on the rising inflation rate that rose to 21.09% in October. However, given Nigeria’s economic structure and current situation, the persistent increase was mainly to lure foreign investors to invest in the economy against the developed economies that are equally raising rates to curb escalating inflation.

 

New Naira notes

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Naira

President Buhari to Launch New Naira Notes Today

CBN says Buhari is expected to introduce redesigned naira notes to the public today at the Federal Executive Council (FEC) meeting in Abuja.

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President Buhari - Investors King

Nigerian President, Muhammadu Buhari is expected to launch the redesigned naira notes today at the Federal Executive Council (FEC) meeting in Abuja.

The launch will precede the circulation of the affected currency which is billed for December 15, 2022. The FEC meeting is a weekly (Wednesday) meeting of the executive arm of government often presided over by the President or the Vice President.

The Central Bank Governor, Godwin Emefiele disclosed on the sidelines of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, that the new naira notes will be displayed for public view on Wednesday. 

Therefore, the governor added that the CBN will not shift its deadline for all old notes to be returned to commercial banks in exchange for newly designed ones.

Investors King recalls that in October 2022, the central bank announced it will issue redesigned N200, N500, and N1,000 notes, effective December 15, 2022, while the new and existing currencies will remain legal tender and circulate together until January 31, 2023.

However, in a sudden change of schedule, the CBN governor noted that the unveiling will be done by the president today stating that the bank will no longer wait till December 15th to unveil and begin to release the new notes.

” By the special grace of God, tomorrow, (today) which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.” Emefiele started.

Meanwhile, the Monetary Policy Committee (MPC) which is the highest decision-making body for any issues related to Nigerian monetary policy has hiked the interest rates from 15.5 percent to 16.5 percent. 

According to CBN, the hike in interest rate is to curtain inflation and maintain economic stability. 

Speaking at the end of a two-day Monetary Policy Committee meeting yesterday, the CBN governor noted that the MPC voted to retain the cash reserve ratio at 32.5 percent and the liquidity ratio at 30 percent.

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