The number two official at the US Federal Reserve said yesterday that the central bank was undecided about whether to raise interest rates next month.
Stanley Fischer, the bank’s vice-chairman, said that it was too “early to tell” if the Federal Open Market Committee would raise the cost of borrowing at its September 16-17 meeting.
“The change in the circumstances, which began with the Chinese devaluation, is relatively new and we’re still watching how it unfolds, so I wouldn’t want to go ahead and decide right now what the case is — more compelling, less compelling,” Mr Fischer told CNBC at the start of the Fed’s annual conference in Jackson Hole, Wyoming.
Although there had been “a pretty strong case” for a September rise until recently, it had not yet been decided. An increase would be the first in nearly a decade.
“We’ve got a little over two weeks before we make the decision. And we’ve got time to wait and see the incoming data, and see what is going on now in the economy,” Mr Fischer added.
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The Dow Jones industrial average fell 73 points lower to 16,581 after his comments.
In a sign of the intensity of the debate at the Fed, Narayana Kocherlakota, head of the Federal Reserve Bank of Minneapolis, cautioned against raising rates this year.
“I don’t see a near-term increase in interest rates as being appropriate, and by near term I mean really through the course of 2015,” he told CNBC.
New figures from the University of Michigan showed a small fall in US consumer confidence in August, while consumer spending, which accounts for more than two thirds of economic activity in the US, rose by 0.3 per cent in July, below expectations of 0.4 per cent.
The price of oil continued to move higher, extending its first weekly gain in nine weeks after short-covering activity by speculators and funds.
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The price of a barrel of Brent crude, the benchmark international contract, rose by 5.6 per cent to $50.24. The move extended the gains since Monday, when the contract hit a six-and-a-half year low just above $42 a barrel.
Tom Koza, global head of energy analysis at Oil Price Information Service, was doubtful whether the rally marked the start of a sustained turnaround. “One up day in a sea of consistent summer selling does not make for an imminent recovery in crude oil, or in gasoline,” he said.