2015 Year End Review

2015 is ending on some very interesting, possibly unexpected, news? For one, we have finally seen the much anticipated rate hike to 25 bps. Oil has also been in the spotlight for quite some time now. Let’s get a recap and see what’s expected for 2016.

The Feds finally raised interest rates as U.S. jobless claims near 42 year low as labor market tightens according to Reuters. Despite the Bank of England holding off on its rate hike citing oil prices putting a damper on inflation, the Feds were not deterred.

Screen Shot 2015-12-26 at 9.44.42 PM
U.S. Inflation Rate vs. Interest Rate

Given the slight rise in inflation in recent months, it makes sense for the 0.25% rate hike. Despite the slight pick up in inflation, it makes little given the inflation rate decline to near zero.

Talks about how Japan is approaching its inflation target when its CPI excludes the falling energy prices. Japan’s November CPI rose to 1.2% slowly approaching its 2.0% target. As oil prices start picking up, the Yen will be an interesting to watch as we look to how the Bank of Japan will approach its devaluation policy.

Finally, the price of oil is not expected to recover any time soon. OPEC said demand for its crude will slide to 2020 as supplies continue to grow. Oil being Venezuela’s biggest export would further hurt the economy as OPEC lifted production limits.

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