Atlanta Federal Reserve President and CEO Dennis Lockhart was speaking to the DeKalb Chamber of Commerce in Atlanta on Thursday.
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But investors have been fretting over the decision for months, with false starts in September and October, driven by fears of the effect of a stronger U.S. dollar on commodity prices, emerging markets and USA economic growth. Its rate-setting committee will next meet on December 15-16.
On Wednesday, the release of minutes from the Fed’s October 27-28 monetary policy meeting showed most officials expect a rate hike in December and have moved past worries about slowing global growth that had prevented a hike in September.
“If the Federal Reserve explained to the public how it made its decisions… families could better plan for the future”, Speaker of the House Paul Ryan, a Republican, said.
“Along with the plethora of FOMC speakers we have heard from over the past couple of weeks and the outstanding October employment report, [the October] FOMC minutes all but confirmed a December hike”, BNP Paribas analysts wrote in a note.
And subsequent moves next year will also be conditional on further improvement in the U.S. economy.
Bill Huizenga (R-Mich.), is aimed at changing the way the Fed operates and making USA monetary policy more predictable via transparency.
The bill is a sign of the deep suspicion many Republican lawmakers hold against the US central bank, which played a major role in America’s policy response to fight the 2007-09 recession.
Investors dealt with a range of issues this week, including minutes from the latest meeting of the Reserve Bank, which suggested a rate cut is not really on the agenda.
“What this means is that even if we do see interest rates rise in the United States and/or the United Kingdom-possibly before the end of this year-it doesn’t necessarily mean equity investors should panic, because we think it is something that can be absorbed”. The yen strengthened after the Bank of Japan kept policy steady. “This divergence is very different to the period prior to the GFC”, Dr Oliver noted.
Mr Michael Every, head of financial markets research at Rabobank Group in Hong Kong, said that despite the recovery, the ringgit will likely resume its weakening trend now markets have priced in Fed tightening as the focus shifts back to the factors weighing on Malaysia’s outlook – general dollar strength, softness in commodities and potential declines in the Chinese currency.
The account said that liftoff from historically low rates might still be delayed by “unanticipated shocks” or disappointing economic data, but such warnings sound increasingly formulaic.
The dollar also advanced in U.S. trade, hitting a near three-year high of 123.59 yen from 123.18 yen earlier in the day in Tokyo.
Unlike before the GFC, global shares are as cheap as they’ve ever been on a cyclically adjusted price-earnings multiple, a measure that compares share prices on a 10-year rolling average.
“China is for a few time likely to continue to grow faster than the rest of the world”, Fischer said.
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“We would not be surprised if we limp through to mid-December”, said David Carter, chief investment officer at Lenox Wealth Advisors in NY.
