Fed’s Williams says monetary policy is still powerful

And when they do prices will rise accordingly.


As of Friday, holdings in exchange-traded funds backed by gold increased 10.4 metric tonnes since the Fed decision.

The wild card, as usual, will be wage growth. This has resulted in market confusion as “uncertainty about the Fed’s reaction function (relative to a rate hike) remains elevated”. It was 0.3 per cent in the 12 months through August, as measured by the Fed’s preferred gauge of price pressures.

As for other precious metals, Comex silver for December settlement tumbled 58.1 cents or 3.8 percent to $14.530 per ounce.

“All in all, things are looking up, and if they stay on track, I see this as the year we start the process of monetary policy normalisation”, Williams said, noting that there are risks to his outlook, particularly dollar appreciation and spillovers from slowing growth overseas.

But that might be changing. History teaches policymakers that they need to act to deal with these sorts of imbalances before they get too big, he said. John Williams, head of the San Francisco Fed, also signaled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.

Falling energy prices have contributed to keeping inflation low, a trend that should be transitory, according to Yellen.

“If the <strong>economystrong> continues on its trajectory…it’s a pretty strong case for liftoff”, with the October 27 to 28 session “live” for the rate hike debate, Dudley <strong>saidstrong> at an event sponsored by the <strong>Wall Streetstrong> Journal in New York.

Dudley said he was confident weak global economic conditions and the strong U.S. dollar would prove to be passing influences and allow the Fed to raise rates soon.

Although he did not vote to raise short-term interest rates from zero at the Fed’s September meeting, Williams said Monday that he thought it would be “appropriate” to begin raising interest rates this year. She added that most Federal Open Market Committee participants reported that unemployment rates were approximately 4.9 percent in the U.S., which was close to the term average rate but she believed this estimate understated the actual ground situation on unemployment. The second part of the mandate, price stability, has been more problematic.

Their rational is that the European Central Bank’s ability to expand its stimulus program is constrained by technical factors like restrictions on how much of any given bond issue it can own, this would dampen the effectiveness of policy divergence.


The US Federal Reserve, notwithstanding its decision not to raise rates in September, is the most likely to turn ‘hawkish, ‘ though it has made it clear the trajectory of any rate rise, when it does come, will be very shallow.

Bonds Rally as Weak Jobs Report Pushes Back Liftoff Timing