Will Fed hike depend on inflation figures?

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Will Fed hike depend on inflation figures?
A worker rides a bicycle past containers at a port in Tokyo.

London - Robust report on US employment hardened expectations for the Fed's first rate increase in nearly a decade.

By Reuters

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Published: Sun 15 Nov 2015, 11:00 PM

Last updated: Mon 16 Nov 2015, 10:00 AM

Inflation numbers from the United States tomorrow could be the final ingredient required to convince the Federal Reserve to raise interest rates next month.
Earlier in November, a robust report on US employment hardened expectations for the Fed's first rate increase in nearly a decade and if prices are shown to be rising steadily those views will likely solidify.
Reuters polls see inflation at 1.9 per cent year-on-year, unchanged from the previous reading.
Minutes from the Fed's October meeting will also be published, giving an insight into the Committee's decision to remove a key sentence on global risks from its policy statement.
"We have had a strong October jobs report and Fed Chair Janet Yellen herself referring to a December rate rise as a 'live possibility' for the first time," said Chris Hare, economist at Investec.
"The coming week should shed a little more light on the prospects for tightening this year."
Attacks by militants across Paris late on Friday could see increased buying of US Treasuries in the coming week as investors move assets from higher risk equities into a safe haven.
Analysts do not see an impact on the Fed's monetary policy at this point.
"The knee-jerk reaction in other terrorist attacks over the last decade has been a rush to safety, including aggressive buying in the US Treasury markets," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.
"I sincerely hope these attacks will prove short in duration and will abate in intensity, in which case the market reaction will likely only include a brief safety bid in Treasuries."
While most US data has been relatively upbeat, retail sales rose less than expected in October, suggesting a slowdown in consumer spending that could temper expectations of a strong pickup in fourth-quarter economic growth.
In the meantime, Britain's Bank of England was once pegged as likely to be the first major central bank to tighten policy but prices fell again last month, data will probably show on Tuesday.
With inflation so far below its two per cent target the BoE's Monetary Policy Committee won't be raising its benchmark rate from a record low 0.5 per cent until at least April, a Reuters poll found, putting it several months behind the Fed.
British retail sales numbers on Thursday will offer clues as to how consumers are faring. - Reuters



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