Dudley: Fed still on track for 2015 rate hike!

UAS FOMC Dudley
UAS FOMC Dudley

The Federal Reserve probably will raise interest rates before the end of 2015, according to New York Federal Reserve Bank President William Dudley.

Dudley, said in an interview with The Wall Street Journal on Monday that the U.S. economy is still expanding at a healthy pace despite the slower global growth, he said inflation is likely to rise in the near future.

The U.S. Central bank delayed a hike at its September meeting amid uncertainty about the global economy, a U.S. Market sell-off and concern that inflation might fall further away from the Fed’s two percent target.

But Dudley said he now feels inflation could reach that target sometime next year, a year or more sooner than the median forecast by Fed policymakers earlier this month.

Dudley’s talk of a rate increase this year — the first since 2006 — dovetails with remarks delivered by Yellen last week at a presentation in Massachusetts. There, Yellen laid out a detailed case for an increase in interest rates within the next few months.

Dudley said the first hike could come as soon as October as policymakers take stock of an improving economy.

“If the economy continues on its track… It’s a pretty strong case for lift off,” with the Oct. 27 to 28 session live for the rate hike debate, another meeting will be held on Dec. 15 to 16. Dudley said at an event sponsored by the Wall Street Journal in New York.

Earlier this month, the Fed put off a rate increase after slower Chinese growth rattled stock markets all over the world.

Market Impact:

The delay has sparked some fears that the Fed could find any excuse for not raising rates, the speeches by Yellen and Dudley are meant to assure investors that the Fed hasn’t made up his mind yet, and despite all confirmations about rate hikes this year, it may not happen at all, as a result, the US dollar pulled back after Dudley speach, the US dollar index fell from 96.65 levels to daily chart support around 96.00 levels, EURUSD rose from the key support 1.1187, so far reached 1.1250 levels, further upside towards 1.1290 is likely. Anyway: the market may continue consolidating in the near future (days), positive US data could be an opportunity to sell the US dollar on tops, but I think the most important event which will decide the next market move is: Nonfarm payrolls data next Friday……. Until that time, the market “may” move unclearly!

MARKET DATA

UPCOMING ECONOMIC EVENTS