Williams said that, if the USA central bank waited too long to raise rates, it could be costly for the economy and that a possible rate hike in September should be in play.
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US stocks edged lower on Friday, led by declines in utility shares as investors weighed prospects for an interest rate increase in the coming months. San Francisco Fed chief John Williams called for the central bank Thursday to return to monetary tightening “sooner rather than later”.
QUOTEWORTHY: Yellen is likely to say the process of raising rates will be “cautious and gradual but leave the impression that the Fed is on track to raise interest rates again this year”, Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a report.
Those comments added to statements perceived as hawkish from New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart in recent days.
“There is a bit on uncertainty over the Fed’s decision and Yellen’s speech next week is motivating investors to take some money off the table”, said Peter Cardillo, chief market economist at First Standard Financial in NY.
A day later, minutes from the Fed’s July meeting, released on Wednesday, said that policy members wanted to keep “options open” but remained divided on the need for a near-term rate hike. All major sectors in Europe were in the red.
The U.S. two-year note yield, among the maturities most sensitive to the outlook for Fed policy, rose four basis points, or 0.04 percentage point, to 0.74 percent as of 11:04 a.m.in NY, according to Bloomberg Bond Trader data. Thursday’s session was the quietest across Europe’s stock exchanges in almost three months, according to Thomson Reuters data.
Japan’s Nikkei.N225 erased earlier gains to trade 0.1 percent lower, set for a weekly loss of 2.6 percent.
A gauge of stock markets around the world fell 0.4 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS pulled back 0.6 percent.
The energy index .SPNY was down 0.8 percent.
But markets only price in an 18% chance of a rate hike in September, according to the CME Group’s FedWatch tool.
In the afternoon, the USA unit climbed as high as around ¥100.30 on a media report that former Cabinet adviser Etsuro Honda, now ambassador to Switzerland, has forecast additional monetary easing by the BOJ, traders said.
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The benchmark 10-year note yield rose fiver basis points to 1.58 percent.
