Currency Traders Respond To FOMC Minutes

Evans said Friday that in his view it could “well be appropriate” to have rates still below 1 percent by the end of 2016.

Dennis Lockhart, president of the Fed’s Atlanta regional bank, said the economic data has been giving off mixed signals and there is more ambiguity in the data than there was a few weeks ago.

Domestic financial conditions, however, tightened modestly as concerns about prospects for global economic growth prompted an increase in financial market volatility and a deterioration in risk sentiment during the period. So shouldn’t confidence that inflation will stage a comeback be rising accordingly too?

The mixed messages delivered Friday won’t resolve the uncertainty that has seized investors over whether the Fed will start raising rates from record lows by year’s end.

Dudley said, based on his own forecast, he agreed with Lockhart about the likelihood of a rate hike in 2015.

Dealer respondents to the early September questionnaire saw a 29% chance that the central bank would raise rates at its Sept. 16-17 policy meeting, down from a 40% chance as of the New York Fed’s prior survey in July. Dudley said. “That would be the question I would ask”.

Instead the reason for not hiking rates in September were the growing risks to economic growth and inflation from overseas.

UBS: The minutes will throw more light on the September decision, especially the external components.

Dudley suggested that other reports on the economy painted a brighter picture.

He said that weaker global developments, particularly in China, could potentially slow the USA economy.

A rate hike in October is “possible”, as a move is now on the table at every meeting, Dudley said in an interview on CNBC on Friday. He noted that the performance of consumer spending data will be of particular importance over coming months.

“The disinflationary impact from falling import prices is easing, but it has not gone away”.

“I continue to feel that cumulative progress is consistent with liftoff relatively soon”, Lockhart said in his remarks to the annual meeting of the Society of American Business Editors and Writers.

United States stocks eked out small gains today, with the S&P 500 on track for its best week since December, as investors bet the Federal Reserve will keep interest rates at near-zero levels this year.

Meanwhile one of the Fed’s most dovish policymakers appeared to soften his opposition to that timing, a subtle shift that could pave a smoother way to the Fed’s first rate hike in almost a decade.

The National Association of Federal Credit Unions (NAFCU) Chief Economist and Director of Research Curt Long commented on the recent FOMC minutes noting that “the minutes from the FOMC’s September meeting frames the decision to hold off on increasing rates as one driven by global weakness rather than on the subsequent reaction of financial markets”.