The US Federal Reserve‘s decision to hold interest rates steady has also given the Indian central bank a window to cut rates without risking market volatility, say economists.
Regarding the impact of volatile overseas markets, Lockhart said that the Fed is “not focused on helping Wall Street“, rather focused on the risks to the broader economy.
Similar to the message conveyed by his central bank colleagues, Evans said the Fed should raise rates “very gradually” after initial liftoff.
In one of several speeches from Federal Reserve officials this week, New York Fed president William Dudley concurred with Janet Yellen’s assessment of the U.S. economy and the growing optimism of a normalisation of USA monetary in 2015. “The sell-off is most likely on the clarity from the Fed on a rate hike in December“, Pradeep Unni at Richcomm Global Services said.
“I am starting to see signs of imbalances emerge in the form of high asset prices, especially in real estate, and that trips the alert system”, John Williams said at a speech in Los Angeles, according to text from his office. “One lesson I have taken from past episodes is that, once the imbalances have grown large, the options to deal with them are limited”. She noted that “may involve a temporary decline in the unemployment rate somewhat below the level that is estimated to be consistent, in the longer run, with inflation stabilizing at 2 percent“. The Fed wants to see inflation move towards its 2% target. This could provide the greenback a few boost if positive numbers give support to a rate hike hope in current year.
As for the inflation rate, it still carries on at a mark which is below the official target set by the Fed’s at two percent and the indications are that it will drop further. But Yellen said Thursday she believed the forces which have kept inflation below the 2 percent goal for more than three years would fade and inflation would begin rising.
“There’s scope for the dollar to [strengthen], based on Fed expectations“, Mr. McCormick said.
The possibility of more brinksmanship in Washington and a potential government shutdown will keep USA markets on edge this week.
But on Friday, as the calendar turns to October, we’ll get the all-important monthly payroll report.
Bullard shared the stage Friday with Laurence Meyer, a former member of the Fed’s board of governors and former Washington University economics professor.