Williams sounded more hawkish, saying that just “a little bit” more data could convince him that a rate hike is needed.
On Sunday, separatists won a clear majority of seats in Catalonia’s parliament in an election that sets the region on a collision course with Spain’s central government over independence, while polls point to no clear victor in Portugal’s October. 4 election. However, looking ahead he expects labor markets to get to full strength and inflation to move above the Fed’s long term objective. However, he did at that the FOMC is “not far” from the 1st rate increase.
Last Wednesday, however, a surprisingly hawkish-sounding Mario Draghi said the European Central Bank needed more time to assess whether China’s slowdown, particularly its impact on commodity prices, cheap oil and a rising euro, would slow inflation further.
Falling energy prices have contributed to keeping inflation low, a trend that should be transitory, according to Yellen.
Williams expected the economy to grow at a 2.25-percent annual rate in the second half of 2015, which will push the unemployment rate down to below 5 percent later this year. Wage growth, a focus for Federal Reserve policymakers, also accelerated last month.
“Despite the US Federal Reserve’s decision this month to keep rates unchanged, citing low domestic inflation and worldwide factors, speculation continues to rage that it could raise rates as soon as October“, Moore continued.
Since that meeting, officials like Fed chair Janet Yellen, speaking last week, and New York Fed boss William Dudley, speaking Monday, have said they still think the Fed will be able to increase its short-term rate target this year. Compared with the paltry 0.6% pace in the <strong>firststrong> quarter, when an especially harsh winter hit economic activity, this figure depicts a strong recovery.
“This would give us sufficient time to assess how the economy is adjusting to higher rates and the progress we are making toward our policy goals”, he said.
“Yellen’s comments reduced financial market views of when the Fed may (if ever) act”, analysts from Citi Private Bank wrote in a research note Thursday. Nasdaq 100 e-minis were down 18.5 points, or 0.44 percent, on volume of 56,911 contracts.
Within minutes of RBI policy announcement, Andhra Bank cut its benchmark lending rates by 0.25 per cent. The other banks are likely to follow suit.
The dollar edged back towards a five-week high against a basket of major currencies on Monday, as investors eyed U.S. payrolls numbers and Chinese data later in the week for confirmation of bets the Federal Reserve will hike interest rates this year.