USA stocks rise with oil prices ahead of Fed statement

Bank of Japan Governor Haruhiko Kuroda unveiled new measures to boost Japan's weak inflation but analysts say he is low on credibility

Wednesday’s vote showed that the chair, mindful that she and her allies represent the central bank’s power base, isn’t unduly bothered by a trio of dissents from regional bank presidents.

“Near-term risks to the economic outlook appear roughly balanced”, said the FOMC in their written statement following the meeting.

“Activity in the labour market and the broader economy has been solid, but wages and inflation continue to undershoot their target and they are anxious about it feeding into inflation expectations”, Su-lin Ong, senior economist at RBC Capital Markets in Sydney.

Earlier, the Bank of Japan overhauled its monetary policy to target interest rates.

But a split in the Fed’s policy body, with three of ten Federal Open Market Committee members arguing for a rate hike now, underscored the increasing hawkish drift of the body.

Yellen’s answer at today’s post-meeting news conference was that there’s no inflation threat so there’s no hurry; and she said, if the Fed holds off raising rates maybe even more people will find work.

Later Wednesday the Federal Reserve will release its latest decision on interest rates.

The Fed slightly adjusted its outlook on the labor market as it expects the USA unemployment rate to hit 4.8%, up from June’s forecast of 4.7%.

“I would expect to see [a rate increase] this year if we continue on the current course”, she said, referring to if improvements in labor market conditions continue and the economy avoids any major risks.

And while none – except for Singapore – run monetary policies that actually target exchange rates, low interest rates do help them keep their currencies competitive.

Losses were limited by the Fed statement suggesting it was still open to a December rate increase, noted Ian Gordon, FX strategist at Bank of America Merrill Lynch in NY. France’s CAC 40 climbed 0.8 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS extended gains to 1.3 percent in its sixth straight session of increases, just 1.1 percent shy of its one-year high touched earlier this month.

Foreign institutional investors (FIIs) have pumped in a net of $6.7 billion in Indian shares for year to date, fueling 9.15% gains for BSE’s benchmark Sensex index.

In situations like this, the FOMC should want to set its policy interest rate at neutral – the value it regards as neither encouraging expansion nor contraction.

“The first phase of a gold run, which is largely driven by the Fed’s inaction to raise rates, is over”. The greenback fell along with Treasury yields after the central bank meeting.

In commodity markets, gold traded down 0.3 percent at $1,333.14 an ounce XAU=, having climbed 1.7 percent as the USA dollar declined on Wednesday.

Looking at the single-family rental market in particular, Steve Hovland, director of research with online real estate investment management firm HomeUnion, says the unchanged rate “bodes well” for investors.

Spot iron ore firmed 0.2 per cent to $US55.87 a tonne while Dalian iron ore futures leapt nearly 4 per cent today.

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