Ms. Mester, however is not a voting member this year but will be in 2016.
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“I think disagreement about whether the economy will be strong enough [to withstand a rate rise] is a realistic one given the economy is growing only slightly above trend, the unemployment rate is coming down very, very slowly, the recent economic news suggests the economy is slowing”, he told an audience at Brookings, a Washington-based think-tank.
Mr William Dudley, President of the New York Fed, said on Thursday that he was still open to the possibility of an interest rate increase this year and stressed that the USA economy was performing “pretty well”.
“What’s unclear is the economy”, he said. “It’s especially unusual and surprising to me given how much agreement there is to the fact that nobody wants to derail this expansion”.
“Without question, the global economy, the financial markets and liquidity in the financial system were all more stable and supportive of a policy change many months ago, when the Fed’s employment target was clearly on its way to being met. Now, conditions are more hard, highlighting the conundrum the Fed is in”, said Mr Rick Rieder, a senior BlackRock fund manager.
A few analysts thought that the mostly soft economic data supported the case for a rate hike delay.
USA job growth slowed abruptly in August and September, prompting financial markets to push back until early 2016 their expectations of the first interest rate hike in almost a decade. An increase in interest rates can depress stock prices as investors move their money from stocks into interest bearing investments, said Dr. Atra.
He noted economists split 50-50 about whether the Fed would tighten in September. “You can be out there talking all the time and thinking you’re being transparent and just confusing things”.
The Fed seemed all set to raise rates at its September meeting until concerns for a slowdown in Chinese economic growth threw off those plans.
The Dow Jones Industrial Average gained 217.00 points, or 1.28 percent, to 17,141.75.
“We don’t know if there’s a revolt but it shows there’s really a debate”, said Briggs.
“I see a linkage between pressure on labor market resources and my confidence in inflation”, he said.
In a separate report, the department announced that in the week ending October 10, the advance figure for seasonally adjusted initial jobless claims decreased 7,000 from the previous week’s revised level to 255,000, below market estimates.
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The markets have become used to hearing mixed messages from Fed officials, but the fact it is trying to end years of extraordinary policy makes every comment more critical.
