Her comments stood in contrast to two Fed officials who signalled late last week that a rate hike could be justified as soon as this month.
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Fed Gov. Lael Brainard on Monday struck a dovish tone, saying the central bank needed to be prudent in considering future rate rises.
A so-so number of jobs added in August (151,000) released in early September caused many analysts to pull back their predictions that the Fed would raise rates at the next policymaking meeting on September 21. Investors still saw just higher than 50/50 odds for a December hike, Reuters reported. More rate hikes were expected to follow quickly, but the Fed has held off. The yield on the 30-year Treasury bond also jumped. When looking at last Friday’s price action, all major US indices dropped by more than 2%., Wwhile gold and USA 2-years treasury bonds, which are supposed to be more sensitive asset classes to changes in monetary policy, just fell slightly.
An easing in US rate hike expectations following a speech by one of the Federal Reserve’s policymakers helped shore up stock markets around the world on Tuesday.
Some analysts point to corporate earnings in Asia picking up, and say concerns are overdone that foreign money will be pulled out of the region due to higher US interest rates.
Comments from Fed Governor Brainard on Monday maintained a notably dovish tone despite recognising that there had been further progress in the labour market. That was seen as a sign the Fed will refrain from raising rates at a policy-setting meeting next week.
Brainard said the USA labor market was not yet at full strength, which means “the case to tighten policy preemptively is less compelling”.
“Stocks in Europe flip-flopped in morning trade with early gains turning to small losses”, said CMC Markets analyst Jasper Lawler in London.
“It has been an enormous privilege to serve as president of the Federal Reserve Bank of Atlanta”, Lockhart said in a statement.
“Brainard’s comments have managed to put a floor under the market”, Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by phone.
“The response of inflation to unexpected strength in demand will likely be modest and gradual, requiring a correspondingly moderate policy response”, she said.
USA crude fell $1.26, or 2.7 per cent, to $45.03 a barrel in NY.
OIL: Oil prices took a pounding Tuesday after a leading industry group said global oil demand growth is slowing by more than previously thought, largely because of a more pronounced economic slowdown during the third quarter of the year.
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The Australian dollar moved lower against its USA counterpart on Tuesday.
