7 Feb 2014
Flash: US to hit its debt ceiling again today - Westpac
FXStreet (Bali) - As Sean Callow, FX Strategist at Westpac, notes, the US hits its debt ceiling again today, however, with s a deal likely to be struck, Callow think there will not be much of an impact on US economic growth or the Fed’s stance.
Key Quotes
"The Aug 2011 deal saw Democrats concede heavy spending cuts in return for Republican agreement. Markets tumbled and S&P cut the US credit rating. But the Oct 2013 agreement saw the Democrats agree to only a very trivial measure on “Obamacare”."
"By far the most likely outcome is an agreement that does not impose new spending cuts, meaning the 2014 growth outlook will not be impacted. While the government shutdown and debt ceiling standoff in Oct 2013 seemed to be a factor in the FOMC’s decision not to start QE ‘tapering’ in Sep, this month’s Congressional debate should not impact the Fed’s currently upbeat view of 2014, which includes an assumption that fiscal policy will be a smaller drag on growth."
Key Quotes
"The Aug 2011 deal saw Democrats concede heavy spending cuts in return for Republican agreement. Markets tumbled and S&P cut the US credit rating. But the Oct 2013 agreement saw the Democrats agree to only a very trivial measure on “Obamacare”."
"By far the most likely outcome is an agreement that does not impose new spending cuts, meaning the 2014 growth outlook will not be impacted. While the government shutdown and debt ceiling standoff in Oct 2013 seemed to be a factor in the FOMC’s decision not to start QE ‘tapering’ in Sep, this month’s Congressional debate should not impact the Fed’s currently upbeat view of 2014, which includes an assumption that fiscal policy will be a smaller drag on growth."