Minutes from the Federal Reserve’s last meeting reinforced that policy makers could raise United States interest rates at the next meeting.
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None of the economists polled expect a recession any time soon, despite the fact the USA economy is at a more mature stage of the economic cycle, with initial weekly jobless claims and the unemployment rate both at very low levels. So while the Fed was taking long-term Treasuries away from investors, the Treasury was pumping out more of them.
The Treasury also made partial awards of the T-bills auctioned off in October and November mainly on higher bid rates resulting from “uncertainty” in the market pending the US Fed decision.
Rising interest rates generally put downward pressure on the demand for houses and housing prices. Since falling below 1.06 at the start of the month, the euro has rallied by almost 5% against the dollar.
Seven of the 10 major S&P 500 sectors were lower, with the technology index’s.SPLRCT 1.6 percent fall leading the decliners. In some of his first public comments since being appointed deputy prime minister in charge of the economy late last month, Mehmet Simsek sought to reassure investors he was committed to fiscal discipline and central bank independence.
Friday’s employment report echoes other recent positive data on job openings, new weekly claims for unemployment benefits and private payroll surveys, Orlando noted to the Times.
The Fed’s decision will be taken during its meeting on the 15th and 16th of December. “Unfortunately for the Reserve Bank, rather than watch the New Zealand dollar tumble, it has got even higher – even as markets have become more convinced of Fed action”.
“If there’s one thing that’s patently clear about Turkey’s central bank it’s that it will only hike rates when market conditions deteriorate dramatically – and even then it’s questionable whether it will act”, Nicholas Spiro of Spiro Sovereign Strategy told Reuters.
The Fed’s upbeat assessment of the United States economy should not blind us to areas of concern such as its high debt and high underemployment, but the excessive focus on the Fed’s first increase is also unwarranted.
Federal Reserve Chairwoman Janet Yellen gathers her notes after testifying to Congress last week.
Grocery, liquor and tobacco sales rose 5.3% in their biggest quarterly gain since the series began in March 1995, driven by an 8.8% increase in fruit exports.
Yellen also said that some drags on the economy had subsided, the Times said.
“The discussion of a raising rate environment has been in the air for well over a year now”, he said. The Fed’s Traditional Tools In the era before the financial crisis, the Fed would primarily influence rates in the market by adjusting the quantity of reserves in the banking system, which kept the federal-funds rate-the interest rate at which banks lend to each other overnight-around the target established by the FOMC.
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