The government held an economic policy meeting on Thursday to discuss various measures to reduce the negative impacts from a possible U.S. Federal Reserve rate hike, after the Federal Open Market Committee met the previous day and made a decision to freeze rates for now but hinted at a possible hike later this year. The Fed said the USA job market has strengthened and economic activity has picked up but business investment is soft and inflation too low.
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In New York, the Dow Jones industrial average fell 48.59 points to 18,343.87, while the broader S&P 500 index lost 5.04 points at 2,172.14. It raised rates previous year for the first time in almost a decade.
Canada’s annual inflation rate in August dipped to a 10-month low of 1.1 per cent, the seventh consecutive month it has remained below the Bank of Canada’s 2.0 per cent target, Statistics Canada said on Friday.
The largest municipal-bond exchange-traded fund by assets was almost flat last week, returning less than 0.1 percent.
However, many financial institutions, including Hana Financial Investment, which argued that the bank would lower the rate next month, now believe the central bank is likely to freeze the rate for at least this year due to the high household debt. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.
Also on Wednesday, ahead of the holiday, the BOJ shifted to targeting interest rates on Japanese government bonds as the focus of its massive monetary easing program, dropping its explicit target of increasing base money.
In the statement the Federal Open Market Committee (FOMC) acknowledged that “the case for an increase in the federal funds rate has strengthened” but it chose to wait for further evidence of “continued progress towards its objectives”.
The Fed, however, strongly signaled it could still tighten monetary policy by the end of this year as the labour market improved further.
Federal Reserve Chair Janet Yellen on Wednesday rebuffed accusations from presidential candidate Donald Trump that the Fed plays politics with its interest rate policy. “A rate hike is probable in December, but it has once again become clear that rates will go up only very gradually”, said Philippe Gijsels, head of research at BNP Paribas Fortis.
The European oil and gas index was up 1.2 percent, helped by a 1.3 to 1.5 percent rise in BP, Royal Dutch Shell and Tullow Oil.
Oil prices rose about 1.8% as the dollar fell and USA crude inventories recorded a surprise drop. “There wasn’t enough to energize the dollar through 100 yen, or 103”, he said.
The BOJ’s announcement initially sent the dollar up more than 1 percent to 102.79 yen, though the gains unraveled as investors realized that the overall market impact was far from obvious.
Gold has firmed over recent sessions as currencies have seen choppy trade, including a weaker dollar, despite the Bank of Japan’s aggressive steps to fight deflation announced earlier Wednesday.
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The euro rose to $1.1180 from $1.1157.
