After last week’s much-anticipated FOMC meeting struck a surprisingly more dovish tone than markets had expected, Fed officials have since been signalling that the decision to keep rates unchanged was a close call and a rate hike later this year remains likelihood. Or, to be more accurate now: I believe it could have.
Shanghai stocks enjoyed a third straight gain as President Xi Jinping prepares to start a closely watched visit to the United States, with many dealers hoping he will sign several trade agreements.
Yellen will deliver a speech on september 24 in Amherst, Mass.s, granting herself another opportunity to communicate the Fed’s policy view.
Nevertheless, he added that he has “gotten comfortable enough on the inflation question to take a first step in one of the coming [monetary policy] meetings”.
Inflation expectations appear well anchored and continuing expansion of the economy should result in tightening in labour markets, Lockhart said. Over the weekend and into Monday, four Fed Presidents offered insight into their own evaluations and outlooks going forward for monetary policy.
“The overall economy will be important for small businesses”, Mokrzan said. He reiterated that “It’s too early to know whether this episode amounts to a bona fide shock to the economy or just a nervous spasm in the markets”. Trying to steer clear from the Fed Chair Janet Yellen’s comments, Lockhart made it clear that China related market swings and global issues were not his “central concern”.
“The US dollar is back on the front foot”, said Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd.
“My summary assessment is that the sources of uncertainty that fueled financial market volatility represent a modest risk to our economy, but a risk factor nonetheless”, he said.
Although they didn’t raise rates now, the majority of Fed committee members believe there will be a rate hike in 2015, according to its economic projections.
“Gold does well when central banks look like they’re losing control”, he said.
Investors are now focusing on the next Fed meeting on October. 27-28, though a growing number of economists now wonder whether the Fed will raise rates at all this year.
Contrary to expectations and textbooks, inflation hasn’t stirred despite the recent decline in the unemployment rate.
Mr. Lockhart indicated that the committee was particularly focused on inflation, which it forecasts to move toward 2 percent next year.