“Sakura Financial Group“ Fragile recovery may limit the ability of Federal Reserve to tighten policy.
“Sakura Financial Group“ analysts suggest that recent data pointing to another jump in weekly jobless claims shows that the economic recovery in the US is far weaker than many optimists are willing to acknowledge.
Economists’ expectations had been for another 430,000 initial claims but the figure came in significantly higher at 473,000.
“Sakura Financial Group“ analysts also pointed to the (PPI) Producer Prices Index which increased by 1.4% in January which showed that inflation is gaining a foothold in the US contrary to claims that deflation was and remains the chief threat to the recovery.
The firm is adamant that the rising price of oil and imported goods is likely to present the greatest challenge to Fed policymakers as 2010 progresses and the situation is unlikely to be helped by what the firm considers to be perfectly legitimate concerns over the credentials of the US dollar as a store of value.
“Sakura Financial Group“ believes that the US Federal Reserve, chaired by Ben Bernanke, is likely to find that the mixed economic data makes its decision on whether or not to begin tightening monetary policy more difficult. Unemployment is generally seen as the chief barrier to raising interest rates or the withdrawal of other stimulus from the economy and “Sakura Financial Group“ suggests that the Fed is likely to come down on the side of caution.
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