Traders are buzzing about whether Fed Chair Janet Yellen will sound a bit hawkish Tuesday and indicate that the Fed could consider raising interest rates at its next meeting in March — three months sooner than most Fed watchers are forecasting.
If she does, interest rates could jump and stocks could wobble.
But analysts say what they should also be weighing, as Yellen testifies before the new Congress for the first time this week, is that the Fed this year may no longer be the only central bank to move away from extraordinarily easy policies. That could have a much bigger and lasting impact on world financial markets.
"The market's thinking central banks aren't going to matter this year. I don't see that as realistic," said Peter Boockvar, chief market analyst at The Lindsey Group. "We're increasing the probability of rate hikes. The ECB is cutting [quantitative easing] QE this year, the Bank of England is going to end QE this year and possibly raise rates. You have the Bank of Japan getting tested every night in their yield curve control experiment. I think that central banks don't matter is unrealistic," he said.
Reference: CNBC
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