NY Fed Chief: Rate Hike Likely This Year but Hinges on Data

The Fed has been meaning to raise rates since June this year but had to delay until September due to the market crash in August. 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.

Fed officials last month opted to leave their benchmark interest rate near zero, where it’s been for almost a decade.

“Before raising rates, I would like to have more confidence than I do today that inflation is indeed beginning to move higher”, Evans said in a speech in Milwaukee, urging an “extra-patient approach” to rate policy. Within the September employment data, the Labor Department said a gauge of wages had risen just 2.2% over the previous year. As a result, companies that stand to gain from low interest rates are expected to reap the benefits for a few more time.

Germany’s Schaeuble: slowdown in EM poses a downside risk to German econ outlook. The euro rose to $1.1320 from $1.1291. They believe that it will be a “prudent” decision to wait for more data to confirm the economy’s growth before deciding on hiking rates. To the upside, immediate resistance can be seen at 1.1370.

“Although USA economic data releases generally met market expectations, domestic financial conditions tightened modestly as concerns about prospects for global economic growth, centered on China, prompted an increase in financial market volatility and a deterioration in risk sentiment during the intermeeting period”, the minutes explained.

Higher US interest rates will attract yield-hungry investors to the dollar.

The Fed will likely not raise interest rates in the near future.

The market consensus is that the tone of the minutes was dovish, i.e., moving away from a 2015 rate increase (although individual Fed policymakers continue to signal that a hike this year is still a good possibility, if not in the cards). Oil staged a rally as the dollar weakened and traders focused on expectations of shrinking US output.

September’s job report was disappointing, but Lockhart notes “the consumer-based dimension of the economy has been robust for several months”. Equities in particular were buoyed by the idea that the ultra-low rate environment would persist. The index ended up 0.36 percent on Friday. The deficit on trade in goods fell to GBP 11.1 billion from GBP 12.2 billion in July. Brent Crude, which is used to price global oils, slipped 40 cents to $52.65 a barrel in London.

Gold prices edged higher in European morning hours on Friday, as weakness in the USA dollar continued after the minutes of the Federal Reserve’s latest policy meeting gave little indication on the timing of a rate hike.

Technology stocks led the way with a 0.5% gain while energy stocks were the laggards, down 0.7%.