The fact that previously issued statements of caution about the risks that global financial and economic developments posed to the USA economy have been dropped from the current statement has been seen as suggestive of a December rate rise by a few analysts. The Dow Jones industrial average closed up almost 200 points, or more than 1 percent.
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The USA dollar rose sharply and yields for US government debt soared in anticipation of higher rates.
CURRENCIES: The dollar slipped to 120.75 yen from 121.07 yen in the previous trading session.
“Never before, that I’m aware of, has the Fed suggested a time frame for raising interest rates”, said Ruven Rodriguez, senior vice-president at Morgan Stanley. “Some combination of payrolls, unemployment and wages signalling continued improvement will be enough”, he said. And in a nod to recent weaker data, the policymakers expressed a few concern about the pace of hiring.
Logan interpreted this statement to mean a December decision will be heavily contingent on the two employment reports and the inflation reports to be released between now and the December 15-16 Fed meeting. She believes the Fed won’t raise rates until at least March 2016 and perhaps later. But a few economic reports since then have been subpar, including a slowdown in job growth for September. That lends added weight to data releases in coming weeks, starting with an advance reading of U.S. GDP due later on Thursday. US gold futures slid 1.3 percent to $1,161 an ounce.
Only 1 member of the 10-person FOMC voted to raise in October 2015 (again Jeffrey Lacker of the Richmond Fed), and the central bank’s policy statement repeated that a future rate hike remains dependent on incoming data. This diminished a few of the hope for a rate hike, while driving the dollar lower for the week. A harsh winter, though, slowed growth.
Since the depths of the Great Recession, the United States has been unable to sustain consistent, positive economic growth.
“US Fed keeps rates unchanged”. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate.
As the FOMC (Federal Open Market Committee) wrapped up its two-day monetary policy meeting, as predicted they chose not to increase the Fed Discount Rate.
The dollar gave back earlier gains, with the euro trading 0.5 per cent higher on the day at $1.0977, having skidded to a 2-1/2 month low of $1.0826 overnight.
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Congress may help if a budget deal announced this week wins congressional approval.
