At some point, risk-adjusted returns on investments in the rest of the world will begin to look favorable relative to holding dollar assets. Dollar assets are becoming an increasing proportion of non-U.S. portfolios; this can continue for a time, but not forever.
The markets recognised the hawkish nature of the statement and most of the analysts picked up on this. Yet when the increase came at the following meeting, it took some in the market by surprise. Perhaps we did not communicate clearly enough, but perhaps the market was also not listening intently enough. 5.