The US Federal Reserve will finally take the plunge and raise interest rates when it meets again just before Christmas.
Advertisement
Appropriate action At its October meeting, the Federal Open Market Committee indicated it “could be appropriate to adjust rates in our next meeting”, she told the house financial services committee.
Despite smaller job gains in previous months, Yellen says the slack in the labor market has “diminished significantly” in 2015. She added that the Fed will move in a timely fashion if data and outlook would justify raising interest rates. Exports rose 1.6 percent to $187.9 billion while imports fell 1.8 percent to $228.7 billion (the lowest level since February). Investors are waiting to get more data points this week to assess a potential rate hike in December.
The ADP National Employment Report showed private payrolls increased 182,000 last month on top of the 190,000 jobs added in September.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged down about 0.1 per cent, though it remained on track for a 1 per cent weekly rise. Fed governor Lael Brainard has expressed among the deepest concerns about whether a weak global economy could damage the USA recovery, but on Wednesday struck a slightly more upbeat note. The reason: Slower job growth and troubles overseas have raised questions about the real underlying strength of the USA economy.
Once considered an unlikely scenario, a December rate hike seems more likely by the day. United States two-year Treasury yields rose to their highest in 4-1/2 years and spreads over their German counterparts widened to their maximum since late 2006, boosting the allure of the dollar to investors.
She cited improvements in the job market, consumer spending and also said the things keeping inflation low – cheap oil prices – are temporary.
The West Texas Intermediate for December delivery fell 1.58 dollars to 46.32 dollars a barrel on the NY Mercantile Exchange, while Brent crude for December delivery decreased 1.96 dollars to 48.58 dollars a barrel on the London ICE Futures Exchange. “Rising speculation that the Fed will raise rates will put further downward pressure on commodity prices”, ANZ Bank said on Friday, adding that it expected USA crude futures to fall by 3 percent in the coming three months due to cost reductions by US producers.
Advertisement
The spotlight will also be on Lagarde to see if she addresses the issue of a potential rate hike by the Fed during her discussion with Fischer Thursday, and if so, whether her stance has changed since September, when the International Monetary Fund chief urged the Fed to not rush its decision.
