Those that wanted to raise the discount rate saw it as “as appropriate in light of the improvements in labor market conditions this year and their expectations for inflation to rise gradually toward the Federal Reserve’s 2 percent objective”, the minutes said. Is the case for a rate hike, or not, really dependent on one report?
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Thokan however says that it is very hard to predict what might happen beyond 2016 because so much depends on what the Fed does.
Traders see a 72 percent chance the central bank will raise its benchmark rate at its next meeting, according to futures data compiled by Bloomberg.
The Dow Jones industrial average rose 247.66 points, or 1.42 per cent, to 17,737.16, the S&P 500 gained 33.14 points, or 1.62 per cent, to 2,083.58 and the Nasdaq Composite added 89.19 points, or 1.79 per cent, to 5,075.20. Mainly this is because the Reserve Bank finds itself in the hard position of having to meet its mandate of keeping inflation within the target band at a time when inflationary pressures are nearly entirely external. A decision to be Santa on interest rates could turn her into a Grinch for stocks. It also has to deal with a rather fragile local economy that will be negatively affected by tighter monetary policy. Most economists expect the European Central Bank to review policy in December and extend its program of quantitative easing, with some even anticipating another cut to the overnight cash rate. Policymakers acknowledge, however, that they have yet to agree what gradual means and this uncertainty has been reflected in increased volatility in short-term Treasury markets in recent months.
Given the economic deceleration over the past year or so, they believe the Fed would have already renewed stimulus measures. After the central bank move, the lira was at 2.8655 against the dollar, firming from 2.8780 before the bank’s statement. The same with auto loans which climbed for the 18th straight quarter.
First, he asks the question why the Fed will be hiking when there is “only moderate growth in the economy as a whole, stagnation in the industrial sector, and an uncertain global environment?”
The precious metals have been hit by strength in the dollar and expectations that the Fed would hike rates in December for the first time in almost a decade.
RBC highlights the speed of jobs creation is slowing as the slack in the workforce fades away. Banks, especially Citigroup, should be able to focus on other areas, as a higher interest rate environment opens up a number of avenues where less attention is paid to control costs.
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‘We want to know why the Federal Reserve, funded and heavily run by the banks, is keeping interest rates so low that we receive virtually no income for our hard-earned savings while the Fed lets the big banks borrow money for virtually no interest, ‘ Nader wrote.
