On Wednesday, Dudley added that the drop in the Chinese currency – down 3.8 percent against the dollar over the last two days – will have “huge implications” for global demand and for commodity prices.
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To my ears, that sounds like a budding excuse to prolong the reign of the Fed’s 0 percent interest rate policy through the end of 2015 and into early 2016.
China’s action makes it more likely that the Bank of Japan and other Asian central banks will also implement policy to devalue their currencies.
Many market commentators point out that Fed policy will ultimately be driven by U.S. economic data.
“It seems that the Fed is watching what is happening in China, but they’re not panicking”, Costerg said.
According to Sinclair, the skills mismatch has persisted because the jobs market has been too weak to incentivize employers to “really go after and develop the workers they need”. He said that monetary policy can help the economy recover by providing incentives for companies to invest and grow but that it cannot target specific skills mismatches.
“Rochester possesses a unique set of assets that are, I think, key to successful economic reinvention including a highly skilled workforce, world-class higher education institutions, a diverse economic base and a forward looking cooperative engagement between the public and private sector”, said Dudley. Market Securities may change its call for first Fed rate move to December from September if tensions don’t abate.
Markets now price a less than 50 percent probability the Fed will lift rates at next month’s meeting, amid speculation the stronger dollar will render it unnecessary.
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“The jobs of today typically require more knowledge, skill and flexibility”, he said in his speech. Authors of a 2012 report by the New York Fed drew attention to a 56% decline in machine operator jobs in upstate New York between 1980 and 2010, below the 35% national rate of decline over the period.
