Dudley downplays Fed divisions, says policymakers on same page

The prospect of a delayed rate hike boosted US Treasuries, which saw the benchmark 10-year note yield fall to a 6-month low of 1.85 per cent. The dollar fetched 119.01 yen after hitting a 5-week low of 118.56 yen. “Recent weakness in the Chinese economy and a few other worldwide markets may have caused the Fed to delay the inevitable rate rise”, said Dr. Robert Atra, Chair of the Department of Finance at Lewis University.

The Thai baht eased 0.31 per cent and Singapore’s dollar was down 0.29 per cent. However, the Korean won rose 0.10 per cent on speculation the country’s central bank will not ease borrowing costs until the new year.

He said the Fed must be clear about its plans for interest rate policy but should not be slave to mathematical formulas.

“Some participants judged that the downside risks to the outlook for economic growth and inflation had increased”, the minutes said.At least one member of the Federal Reserve is anxious about the central bank falling short of its inflation target.In comments today, Chicago Fed President Charles Evans said he expects the Fed policy rate to be below 1% in late 2016 and expects inflation below 2% by the end of 2018.

A spate of underwhelming economic data, turbulent financial markets, still-subdued inflation and mounting signs that the global economy is also going through a soft patch has spurred traders to pare back their expectations for when and how severely the Fed will lift interest rates.

“Investors are reacting to the increasing likelihood that the Fed rate hike, which had been expected just a month ago in September, now likely won’t happen during the course of this year”, said David Levy, portfolio manager at Kenjol Capital Management. Two more job reports may be critical in making the decision.

US DATA KEY: On Wednesday, government figures showed retail sales up a bare 0.1 percent in September from the previous month.

The survey forecast non-farm payrolls averaging 190,000 in the fourth quarter, and dropping to an average of 189,000 jobs in the first quarter of 2016. No matter the victor the Canadian economy will continue to face the same adverse factors of low commodity prices, the slowdown in China and a rate divergence environment.

“We have a dichotomy”. The pound traded near a 3-week high of $1.5495 struck overnight, when it soared 1.5 per cent on upbeat British employment data.

Even with the jobless rate forecast in a range most Fed officials think is consistent with a low but steady rate of inflation, price pressures are expected to remain benign. The hiring rate stayed at 3.6%, and the quits rate stayed at 1.9%. Core PCE is the Fed’s preferred inflation measure. The Shanghai Composite Index was up 2.3 percent at 3,338.07.