The CME Group’s Fed futures watch tool put the probability of a December hike at 70 per cent.
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Janet Yellen, the Fed’s chairwoman, has suggested that the bank would like to raise rates about one percentage point over the next year, implying a level a little above 1 percent at the end of 2016.
The euro edged up to US$1.081 (RM4.739) around 10pm from US$1.0741 at the same time Wednesday.
It added that this note does not necessarily reflect the views of the IMF’s powerful executive board, but, all the same, the fact that it was published at this critical juncture for United States monetary policy won’t be lost on anyone.
Part of the delay in raising rates this year has been the effects of a roughly 15-percent increase in the value of the dollar.
Several officials on opposite sides of the Fed’s debate have made speeches highlighting differences in opinion about the pace of the rate increase.
Elsewhere, the Australian dollar was down 0.15% against its USA counterpart at US$0.7115.
While it’s true that we have yet to achieve “lift-off” from zero percent interest rates, rates have not been the only means by which the Fed has provided stimulus.
Inflation (or lack thereof) has been the key economic indicator fueling Fed officials’ reluctance to raise interest rates.
Davidson is in the camp of those who argue the USA economy is healthy enough to absorb a moderate rate hike, but he also understands the stress that comes with reversing a 33-year stretch of consistently falling rates. One argument is that financial stability is more important than hitting inflation numbers. Cleveland Fed President Loretta Mester (non-voter) is scheduled to speak today and she is likely to offer a cautious message about a December rate hike.
Piegza is pointing to a recent U.S. Labor Department report showing unemployment in the country fell to a seven and a half year low of 5% as the number of non-farm jobs added was the largest since last December.
In many advanced economies, it said, monetary policy “must remain accommodative, including through unconventional measures, to reduce risks to activity from low inflation and prolonged weak demand”.
Auto sales, though still at a high level, unexpectedly dropped 0.5%, taking back a portion of the 1.4% increase recorded in September.
In fact, we could say the Fed gave a remarkable demonstration of synchronized speaking, implicitly of course, while for now at least, the strength of the dollar doesn’t seem causing a great deal of concern.
“In that case, we should see strong outperformance by Asian and European assets in this tightening cycle – more like 2004 than 1994”.
Excluding the volatile food and energy categories, so-called core prices were down 0.3% from the prior month. The price of a barrel of Brent crude oil has fallen by 3% over the last 24 hours and by nearly 6% since the start of the week.
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Fed officials have blamed weak inflation on temporary factors, including depressed energy and import prices, and most economists surveyed by The Wall Street Journal now believe the central bank will raise rates in December.
