United States economy seen expanding 2.3 percent in fourth-quarter: Atlanta Fed

Fed officials are widely expected to raise the short-term interest rate they control for the first time in nine years at their next meeting in December.

Analysts do not see an impact on the Fed’s monetary policy at this point.

Part of the delay in raising rates this year has been the effects of a roughly 15-percent increase in the value of the dollar.

Without getting too caught up in what the Fed should and shouldn’t do, I would predict that the US Federal Reserve will indeed raise rates with only 60% certainty.

“Fed officials spoke today but remarks from the most important official, Chair Janet Yellen, were mum on policy specifics”, Manimbo said.

“It is quite clear that the Fed would be warranted in hiking in December in case the market does not strike another air pocket”, Jacobsen said.

While noting that the pace of jobs gains had slowed in August and September, employers added a “very robust” 271,000 new hires last month, Mester said, adding that the rate of employment gains in recent months was still “enough to put downward pressure on the unemployment rate”. “The coming week should shed a little more light on the prospects for tightening this year”, stated Chris Hare, economist at Investec. But ultimately, uncertainty about the Fed won out.

The U.S. economy can handle a rate increase and the longer interest rates remain at zero the greater the risks to financial stability, Mester said.

Lastly, there is what I view to be the most valuable leading economic indicator of them all for our consumer-based economy – the rate of growth in consumer spending.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, closed the week at 98.90, up 0.33% on the session. In addition, what better a time to test if the economy can survive a rate hike than at the busiest time of the year? It has held rates near zero since late 2008.

“The 25 basis points on its own is meaningless, but if it’s taken as a genuine change in direction then it has implications”, said Bob Rice, chief investment strategist at Tangent Capital.

I do not understand how the Fed can believe that it is remotely close to achieving its inflation mandate of stable prices, or a rate of inflation that approaches 2%.

“We’re speaking about going from an extremely-accommodative financial coverage to an especially accommodative financial coverage”, mentioned Tom Nelson, senior vice chairman and director of funding options at Franklin Templeton.

But picking winners and losers in the rising-rate cycle requires, first and foremost, a rising-rate cycle. The government’s budget year runs from October through September.