Over the a year ago, Brainard has been one of the Fed’s most vocal defenders of low interest rate policy, arguing the United States is vulnerable to economic troubles in Asia and Europe.
Advertisement
Policymakers will go into the September 20-21 meeting divided, with some concerned current lowrates will fuel a surge in inflation while another camp, which includes Brainard, has argued that the Fed should not rush to raise rates.
Another dove, Fed board member Lael Brainard, is scheduled to give a speech yesterday, raising speculation that she, too, “will use this appearance to signal a September rate hike”, economists Kevin Cummins and Michelle Girard of the Royal Bank of Scotland, wrote in a research note yesterday.
While some investors had speculated that Brainard would switch over to the more hawkish camp, the Fed governor said Monday she wanted to see a stronger trend in US consumer spending and evidence of rising inflation before the Fed raises rates.
Brainard used the plural “months” to indicate how much more economic data she wants to monitor, a key suggestion according to Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
The Dow rallied 1.32 percent to end at 18,325.07 points and the S&P 500 jumped 1.47 percent to 2,159.04.
A gauge of equities across major markets .MIWD00000PUS turned positive on Brainard’s remarks after falling 1 percent earlier in the session. It was last up 0.3 percent. The stock was the top percentage gainer on the S&P. On Friday a federal judge ruled that the company can build a $3.8 billion pipeline that is meant to carry oil from North Dakota to IL. Nikkei futures .NKc1 were flat after having fallen more than 1.5 percent earlier.
The futures market pointed to a negative open for USA stocks and markets in Europe tumbled as investors anxious about the possibility of an imminent US interest rate hike. The economy expanded at an unimpressive 1.1 percent annual pace from April through June after growing just 0.8 percent in the first quarter and 0.9 percent in the fourth quarter of 2015. And US economic growth has been sluggish since late previous year, dragged down by the worldwide troubles and by a strong US dollar that makes US-made goods pricier overseas.
The dollar index .DXY was last down 0.2 percent.
United States stock prices rose following Brainard’s comments while the dollar weakened and yields on USA government debt fell.
“The market right now is battling with the timing and how likely it is that they get a hike off this year”, said Aaron Kohli, interest rate strategist at BMO Capital Markets in NY.
Advertisement
Crude oil pushed up less than 1 percent with prices hitting over $46 a barrel. Brent crude LCOc1 was down 0.6 percent at $48.00 a barrel after rising 0.65 percent overnight on a weaker dollar and stronger USA equity markets.
