US Fed officials divided on rate hike

Federal Reserve policymakers agree that more economic data is needed before raising interest rates, although some see a need to tighten policy soon, according to the minutes from the US central bank’s July 26-27 policy meeting.

The minutes released on Wednesday showed several policymakers said a slowdown in the future pace of hiring would argue against a near-term hike even as members of the rate-setting Federal Open Market Committee were generally upbeat about the US economic outlook. The minutes disappointed those who had bet the Fed could be turning more hawkish, after New York Fed chief William Dudley said on Tuesday it could possibly raise rates as soon as September.

In the United States, stocks closed mostly higher on Wednesday as investors assessed the latest minutes from the Fed for more clues on the trajectory of interest rates. The S&P 500 lost 9.16 points, or 0.42 per cent, to 2,168.99, Xinhua news agency reported.

The dollar index, which measures the greenback against six major peers, was down 0.59 per cent at 94.159 in late trading, the lowest level in seven weeks.

MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS was up 0.4 per ent as investors added to positions after a 14 per cent rise over the last two months.

The yield on the benchmark 10-year Treasury note fell 1 basis point to 1.551 percent, the yield on 5-year note dipped 1-1/2 basis points at 1.131 percent and the yield on short-term 2-year note also slid 1-1/2 basis points at 0.722 percent by 12:40 GMT.

The minutes showed members of the rate-setting Federal Open Market Committee were generally upbeat about the US economic outlook.

The minutes mirror sentiments behind a statement made by William Dudley, president of the Federal Reserve Bank of NY and a close ally of Fed Chair Janet Yellen, in a TV interview this week.

Federal funds futures on Friday suggested traders saw a 53.5 percent chance of a Fed rate hike this year, according to CME Group’s FedWatch program.

While policymakers agree that more economic data is needed before raising rates, some expect a hike will be needed soon, according to the minutes from the U.S. central bank’s July 26-27 policy meeting.

“The majority believed it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity”, the minutes read.

US consumer prices were unchanged in July from the previous month, following two straight monthly increases of 0.2 percent.

The stronger dollar also makes dollar-denominated gold more expensive for holders of other currencies.