Fischer Says Global Outlook Weighs More on Fed Than in Past

Expectations through most of the year had been for the Fed to hike rates by 2016 as the world’s number two economy picks up pace.

Gold rose to a seven-week high on Friday after minutes from the Federal Reserve’s last policy meeting showed the US central bank was in no hurry to raise interest rates, pressuring the USA dollar.

Lowell Yura, head of multi-asset solutions with BMO Global Asset Management, described it as a problem of “asymmetric payoff” where Fed members anxious that if they raised rates prematurely, they could trigger deflation, which is much harder to deal with than inflation.

“In determining how long to maintain this target range, the Committee will assess progress-both realized and expected-toward its objectives of maximum employment and 2 percent inflation”, the Fed said in a statement.

“The Fed is only likely to remain credible as long as their monetary policy hold looks like a data-dependent choice and not dithering indecision”.

The firms surveyed were the Fed’s so-called primary dealers, firms that trade billions of dollars of government securities with the Fed each day and must meet various broker financial requirements to participate.

The Fed was uncertain if there was sufficient economic data on a wider scope to back up an increase in the interest rate.

Fischer’s comments followed remarks from New York Fed President William C. Dudley, who told CNBC he still expects the Fed to raise rates this year, provided that his outlook for inflation and growth stays on track, though that view was “not a commitment”. The central bank on Thursday released minutes from that discussion showing that officials were hesitant to make a move in the face of volatile financial markets and increased uncertainty over the extent of the strains in China and other developing countries.

When the Fed does start raising rates, something it hasn’t done in nine years, it will eventually mean higher rates for consumers and businesses.

“Have we seen enough information between September and October to convince us to do in October what we didn’t do in September?” Wall Street was poised for a steady opening, with Dow futures and the broader S&P 500 futures up 0.1 percent – a day after they posted sizeable gains in the wake of the publication of the minutes.

U.S.jobs data last week showed that private sector hiring cooled in August and September.

Southeast Asian stock markets have risen on hopes of a US Federal Reserve rate hike delay.

Crude prices have seen healthy advances in the past week, surging more than 10 percent to multi-month highs as worries about a stronger dollar, a supply glut and weak demand ease.

Elsewhere in metals trading, silver futures for December delivery were little changed at $15.760 a troy ounce, while copper futures for December delivery rallied 2.47% to $2.401 a pound. He also mentioned that “there is no problem in moderately overshooting” the Fed’s inflation goal, rather than undershooting it as they have in recent months.