Rate Divergence and Uncertainty Will Drive Volatility Higher in 2015

Vastly divergent policies from global central banks have sparked investor concern that 2015 is set to be a turbulent year, as the Bank of England (BoE) details the dangers that an interest rate rise poses for the nation’s housing market.
“Next year is going to be massively volatile because you’ve got all the major central banks doing things they don’t really know how to do,” Peter Sullivan, head of European equities at HSBC, told CNBC Monday.

The U.S. Federal Reserve and the BoE are on course to raise their main interest rates from record lows either next year or at the beginning of 2016. This is in contrast to the euro zone and Japan, where key interest rates are likely to remain low for the next few years.

Interest rates – which are benchmarks for all sorts of mortgages and loans – were cut after the global financial crash of 2008 in the hope of stimulating lending. However, with both the U.K. and U.S. economies seeing better growth and falls in unemployment levels, expectations are high that there will be a change in policy in the near future.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza