Fischer also noted that the Fed is probably the most important central bank in the world, and while low rates do hurt savers and others dependent on fixed income, that current policies are working as designed.
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Fed Vice Chairman Stanley Fischer, in an interview with Bloomberg TV on Tuesday, said the US job market is close to full strength and the pace of interest rate hikes will depend on how well the economy is doing.
Among others, one of the sectors expected to gain from an interest rate hike is insurance.
Federal Reserve Chair Janet Yellen speaking from Jackson Hole indicated that the US central bank was nearing the point of raising the short-term Fed Funds rate once again, possibly at their September meeting.
The case for a rate hike – a plus for the dollar – won more support Tuesday as USA consumer confidence in August sat at its highest level in nearly a year. Fed Vice Chairman Stanley Fischer said this week economic data will determine the trajectory of interest-rate increases. Neither should we expect unconventional tools to be as effective the next time around; long-term interest rates have much less room to fall now than they did in 2009-10, for instance.
Economists surveyed by MarketWatch forecast the US added a solid 160,000 new jobs in August. The Nasdaq Composite .IXIC was down 16.63 points, or 0.32 percent, at 5,215.69. In each of the last three downturns the Fed responded by cutting its policy rate at least 500 basis points.
The S&P 500 Index dropped toward the lowest level in about a month, while the dollar lost ground among its major peers as sluggish US manufacturing data tempered optimism with positive global growth signs.
Bill Gross, the billionaire manager of the Janus Global Unconstrained Bond Fund, is recommending that the Fed raise rates twice by as early as March, with the first hike at this month’s meeting. “But we’ve been down this road so many times, and I’m still very wary”. Benchmark 10-year Treasury yields were little changed after posting the worst monthly performance since June 2015.
Toward 2100 GMT, the euro was at US$1.1187, down from US$1.1195 on Friday, while the dollar stood at ¥101.88, up from 101.77. As they have for months, the Fed’s hawks continue to note the strength of the labour market and dismiss low inflation as the transitory product of low energy prices and a strong dollar.
The greenback rallied last month and has trimmed its loss this year to 3.9 percent as US central bankers signaled that employment and inflation gains have bolstered the case to hike rates. The S&P 500 index rose 0.5% Monday, while the Dow average ended 0.6% higher. Since 1996, 15 out of 19 releases have trailed economists’ estimates, data compiled by Bloomberg show. If we’re able to break above this channel, we could be well on our way to a Dollar Breakout reminiscent of H2 2014 that wreaked havoc on Emerging Markets and shocked commodity markets due to the stronger US Dollar. The prospect for higher interest rates usually lifts the dollar, and this makes gold more expensive for holders of worldwide currency to purchase.
Traders have priced in a 24 percent chance of a hike in September, down from 30 percent before the ISM data was released.
Ward McCarthy, chief financial economist, said even if the payrolls meet his forecast of 205,000, the Fed will not hike in September.
Europe’s broad FTSEurofirst 300 index .FTEU3 closed up 0.50 percent, at 1,357.17.
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Oil rose 7.5 percent in August amid speculation that OPEC talks in Algiers may lead to an agreement to manage the market.
