Fed: Positive Economic Conditions Could ‘Soon Warrant’ an Interest Rate Hike


Hong Kong shares was the top gainer in Asia with a 1 per cent rise

The Dow Jones industrial average (.DJI) fell 8.32 points, or 0.04 percent, to 18,565.62, the SP 500 (.SPX) gained 1.75 points, or 0.08 percent, to 2,183.97 and the Nasdaq Composite (.IXIC) added 9.27 points, or 0.18 percent, to 5,237.93. Seoul’s Kospi added 0.9 percent to 2,017.94 and Sydney’s SP-ASX 200 advanced 0.4 percent to 5,497.40.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7 percent, its biggest rise since August 8, as investors took the Fed’s hesitancy as a reason to increase their positions after a 14 percent rise over the last two months.

The July meeting’s minutes published on Wednesday showed that Fed policymakers were generally upbeat about the US economic outlook and labor market.

New York Fed President William Dudley, who on Tuesday unnerved the markets by saying a rate hike was possible in September, is scheduled to give a press briefing at 10:00 a.m.

The minutes came after two policymakers on Tuesday said the economic stars now appear to be aligning despite weak USA growth in the first half of 2016.

U.S. Federal Reserve policy makers last month believed risks to the USA economy had lessened but wanted to keep their interest rate policy “options open”, according to minutes released August 17, 2016.

However, the minutes from the July meeting seemed to pour cold water on the idea of a September rate hike.

Odds of an increase in borrowing costs in December fell to 49% from 51% a day earlier, according to futures prices compiled by Bloomberg.

Stocks closed a little higher on Wednesday after minutes form the Fed’s 26-27 July policy meeting showed a continued reluctance to jump to any conclusions about the state of the economy.

The minutes, which will be released at 7pm United Kingdom time, will reveal what was said at the Fed’s latest policy meeting and could give an indication as to the timing of any interest rate hikes. A gauge of the greenback fell 0.4 percent.

“I don’t think anything in these minutes supports a quicker rate increase and again, I think they’re data dependent still”, Everbank World Markets president Chris Gaffney told Reuters.

The fall in the dollar dominated currency market moves.

CURRENCY: The dollar edged up to 100.28 yen from Wednesday’s 99.84 yen.

But about 71 percent of 62 economists surveyed by The Wall Street Journal this month believed that the Fed will wait until December to raise rates.

“[The minutes were] broadly consistent with the message we got with the [July] statement, which is that, by acknowledging that near-term risks have diminished, it was an ever-so-slight and incremental step towards signalling a rate hike at some point”.

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