“What is more, it now talks of “whether it will be appropriate to raise the target range (for the federal funds rate) at the next meeting”.
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Last month, the FOMC and Fed chief Janet Yellen said monetary policy would be accomodative due to low inflation rates, a high U.S. dollar, and fears over China’s slowing GDP growth rate.
“If markets don’t tighten financial conditions for them, if the US data remain firm, if global events don’t scare them and if the sun shines every day, the Fed will raise rates at their December meeting”, Societe Generale currency analysts wrote in a note on Thursday. They removed a sentence from their September statement that had warned of global weakness stemming from a sharper-than-expected slowdown in China.
“The committee continues to see the risks to the outlook for economic activity and the labor market as almost balanced”, the Fed said in its statement.
Asian markets had a strong start but soon lost momentum in the wake of the latest policy statement from the Federal Reserve, which left the door open to a rate rise by the end of this year.
Investors quickly placed bets reflecting a higher chance the US central bank will raise rates in December, with futures contracts implying a 43% possibility compared to 34% prior to the statement.
“At these prices gold has already priced in a December rate hike”.
Fed officials said Wednesday that the USA economy is still expanding modestly.
After the Federal Open Market Committee released its policy update following a two-day meeting, United States stocks tumbled and the dollar moved sharply higher, gaining more than a cent on the euro at $1.0941.
THE Federal Reserve announced today that it will keep interest rates at their record low of 0-0.25%.
In that decision, the Fed kept the interest rate unchanged at 0%, as expected. That includes better labor-market data, and proof that inflation is rising.
“The recovery from the Great Recession has advanced sufficiently far and domestic spending appears sufficiently robust that an argument can be made for a rise in interest rates at this time”.
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The Fed’s statement Wednesday was approved on a 9-1 vote, with Jeffrey Lacker, president of the Fed’s Richmond regional bank, dissenting.
