Brainard cited slower progress on employment than expected, as well as stubbornly low inflation, and a gloomy overall trend in the global economy as reasons to hold interest rates for the foreseeable future.
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Mr Tarullo told CNBC that he doesn’t now favour raising interest rates in 2015.
He added on Monday that while the USA economy was not directly impacted by China’s recent economic slowdown, the Fed was closely watching Europe which does have higher exposure and could have a knock on effect across the Atlantic.
One example: Was President Obama in error to depose Qadaffhi?
“Once unthinkable, the fact negative rates are creeping in the public debate mean we can’t dismiss them anymore”, said Standard Chartered senior economist Thomas Costerg.
Recently, investors have rallied safe-haven assets with net long fund position (NLFP) in gold rising 10,174 contracts or 13 percent to 86,819 from 76,645 in the week ending October 6, according to the latest CFTC statistics.
But in the last two years, the European Central Bank and its counterparts in Switzerland, Sweden and Denmark have used a version of the tool with a few success.
For instance, in the Summary of Economic Projections, which had been prepared by FOMC participants in advance of the meeting, Fischer said, “most participants, myself included”, anticipated that achieving these conditions would entail an initial increase in the federal funds rate later this year.
Single-family building permits climbed to an annual rate of almost 700,000 units in August, up about 5 percent from the fourth quarter of 2014, but housing growth remains milquetoast at best, Federal Reserve Board Governor Lael Brainard suggested while speaking at the 57th National Association for Business Economics Annual Meeting in Washington, D.C., on Tuesday.
Lockhart said last week that the Fed will need to monitor the strength of the consumer in coming weeks and months in making a decision.
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Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as traders were beginning to price in a potential delay in the U.S. central bank’s rate hike. Lockhart said the idea of using the tool “in the near term is not very plausible to me”. However, a weak United States nonfarm payrolls report earlier this month prompted the market to shift expectations of a Fed rate hike to 2016 and sell the dollar. Carsten Menke also said that in order to see a reversal from the investment side, they would like the Fed to loosen up on the issue rather than tightening. Yellen also noted that the inflation shortfall is likely to be transitory, as one-off factors such as lower energy prices and weaker imports due to a stronger dollar abate.
