“Given the uncertainties surrounding the degree of accommodation that is necessary to achieve 2 percent inflation and full employment, I prefer a path that involves only gradual increases in interest rates and that essentially probes how tight labor markets can be, consistent with our 2 percent inflation target”, he said. Only eight counties in the state had a lower rate than Cobb in September.
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The USA labor market came roaring back in October after a two-month lull, with unemployment and payroll figures exceeding analysts’ expectations.
The USA economy is rebounding strongly after a worrisome summer.
The intentions of the monetary mandarins in the Eccles Building are becoming clearer, as a strengthening jobs market makes it increasingly likely that the Federal Reserve will hike interest rates at its next meeting in mid-December.
Still, the euro remains vulnerable as Portuguese government bond yields hit a four-month high and shares fell after leftist parties reached agreement on forming an alternative government to try to oust the centre-right. Futures on the Dow Jones industrial average fell 51 points in early trading. That is 2.5 percent higher than 12 months ago, the largest year-over-year gain since July 2009.
That is comfortably above inflation, which was been flat in the past year. The job growth was a strong contrast to a 177,000 jobs in August.
Many higher-paying sectors also saw healthy gains, such as professional and business services, which includes lawyers, architects and engineers. The month of October seems to have added 271,000 jobs, which seems to be the highest in almost a year. People think, the Fed “may not be raising rates because (it knows) something we don’t know”.
After pricing out the likelihood of any move this year, financial markets have turned tail and are now giving a 68 percent probability of a rate hike next month, nearly bang in line with the Reuters poll. 2 percent to 70.46 USA cents.
Other recent data also suggest that global turmoil and manufacturing’s rough patch haven’t slowed economic growth.
Also weighing on US stocks, Apple’s shares (AAPL.O) fell after Credit Suisse said the iPhone maker had lowered component orders by as much as 10 percent.
Rosengren, one of the strongest supporters of policy accommodation since the financial crisis, said it was now reasonable to ask whether the current level of near-zero rates was necessary given he expects the economy to continue expanding at above its potential rate of around 2 percent.
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A slowdown in the third quarter was blamed on businesses cutting back on their stockpiles – a factor that was expected to be temporary as firms geared themselves for the holiday season.
