173,000 jobs were added to the American economy in August, which, according to analysts is a weaker than expected result and which could delay the long-awaited increase in interest rates by the Federal Reserve when policy makers meet in two weeks time.
However analysts are also of the view that the report is balanced and a decision by the Federal Reserve about the interest hike would be difficult to take. The data, according to analysts, was more tilted in the favour of the Fed holding back its rate hike decision till its next meeting in December.
There is a section of officials at the Fed who still believe that there is little risk in keeping monetary policy accommodative and waiting until December to tighten it.
Economists had anticipated that the hiring in August would be around 220,000-job gain which was more than the data revealed while the unemployment rate did well as it fell to 5.1 percent from 5.3 percent, the lowest since early 2008.
“The latest jobs data will leave everyone maintaining their position on the Fed. Not the decisive data the Street wanted,” said Steven Ricchiuto, chief economist at Mizuho Securities USA.
The interest rates in the US have been near zero since the financial crisis of 2009-09 and the Federal Reserve officials have repeatedly signaled they plan to soon raise interest rates.
The decision of the Fed has at stake billions of dollars at the Wall Street as well as other international markets, and there is quite a conjecture about the exact timing of the decision for the investors and analysts on Wall Street as well as for economists and other strategists.
Even though the probable rate hike would be small – to the tune of a quarter of a percentage point, the issue is more a psychological one as there has not been a rate hike by the federal Reserve since June 2006.
On the other hand, the Federal Reserve is of the view that the recent volatility of in the US markets over the China slowing down issue and the lowering oil and commodity prices have apparently limited direct implications.
“I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” said Jeffrey Lacker, the president of the Federal Reserve bank of Richmond in the text of a speech delivered on Friday.
“It’s time to align our monetary policy with the significant progress we have made,” said Lacker. He based his argument on the shorter-term inflation gauges that seem to be moving towards the anticipated target of 2% and the slack in the labour market that has been cut back to pre-recession levels.
“It’s time to align our monetary policy with the significant progress we have made,” he said.
The remarks by Lacker cam at a time when a number of ex-Fed officials have expressed their concerns to the fact that futures markets have persisted in refusing to discount a September rate rise by the Federal Open market Committee.
(Source:www.nytimes.com & www.reuters.com)
However analysts are also of the view that the report is balanced and a decision by the Federal Reserve about the interest hike would be difficult to take. The data, according to analysts, was more tilted in the favour of the Fed holding back its rate hike decision till its next meeting in December.
There is a section of officials at the Fed who still believe that there is little risk in keeping monetary policy accommodative and waiting until December to tighten it.
Economists had anticipated that the hiring in August would be around 220,000-job gain which was more than the data revealed while the unemployment rate did well as it fell to 5.1 percent from 5.3 percent, the lowest since early 2008.
“The latest jobs data will leave everyone maintaining their position on the Fed. Not the decisive data the Street wanted,” said Steven Ricchiuto, chief economist at Mizuho Securities USA.
The interest rates in the US have been near zero since the financial crisis of 2009-09 and the Federal Reserve officials have repeatedly signaled they plan to soon raise interest rates.
The decision of the Fed has at stake billions of dollars at the Wall Street as well as other international markets, and there is quite a conjecture about the exact timing of the decision for the investors and analysts on Wall Street as well as for economists and other strategists.
Even though the probable rate hike would be small – to the tune of a quarter of a percentage point, the issue is more a psychological one as there has not been a rate hike by the federal Reserve since June 2006.
On the other hand, the Federal Reserve is of the view that the recent volatility of in the US markets over the China slowing down issue and the lowering oil and commodity prices have apparently limited direct implications.
“I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” said Jeffrey Lacker, the president of the Federal Reserve bank of Richmond in the text of a speech delivered on Friday.
“It’s time to align our monetary policy with the significant progress we have made,” said Lacker. He based his argument on the shorter-term inflation gauges that seem to be moving towards the anticipated target of 2% and the slack in the labour market that has been cut back to pre-recession levels.
“It’s time to align our monetary policy with the significant progress we have made,” he said.
The remarks by Lacker cam at a time when a number of ex-Fed officials have expressed their concerns to the fact that futures markets have persisted in refusing to discount a September rate rise by the Federal Open market Committee.
(Source:www.nytimes.com & www.reuters.com)