Focus on rates

‘When is the Fed going to stop?’ and ‘when is the ECB going to start?’ have been among the key questions of last week. With Fed funds now at 4% and the FOMC still characterising monetary policy as loose while fretting about upside inflation risks (though the statement indicates that ‘long term inflation expectations remain contained’), it looks likely that the Fed will press on into 2006. But by the end of Q1 (ie, three more rate hikes), sufficiently compelling evidence of heightened risk