Fed seen holding rates steady as inflation watch continues
The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.
Central to the debate at the Fed's July 26-27 policy meeting will be how to reconcile upbeat U.S. economic data, highlighted by strong job gains in June, with a global growth slowdown and other headwinds threatening the inflation trajectory.
For San Francisco Fed President John Williams, one of the 17 members participating in the central bank's rate-setting deliberations, all that is needed is a bit more confidence that inflation is indeed headed toward the Fed's 2percent target.
The inflation measure the Fed prefers to track is currently at 1.6 percent.
Other policymakers, like influential New York Fed President William Dudley, have signaled they would rather wait for more tangible signs of a rise in inflation before pulling the trigger on a rate increase.
Economists polled by Reuters expect the Fed to hold rates steady until after the election.
Dollar slips ahead of Fed, yen firms
The dollar slipped ahead of the U.S. Federal Reserve's two-day policy meeting that begins later on Tuesday, while the yen gained despite expectations that the Bank of Japan will ease later this week.
The U.S. central bank is widely expected to stand pat on policy, but investors were bracing for any possible signals from the Fed about a tightening later this year.
Fed fund futures on Monday indicated that the market sees nearly no chance of a rate hike this week, but the chances of a December hike rose to 56 percent, up from 48 percent on Friday.
The dollar index, which tracks the greenback against a basket of six major rivals, edged down 0.1 percent to 97.228 .DXY, below the previous session's high of 97.569, its loftiest peak since March.
Most economists surveyed by Reuters expect the BOJ to take some form of easing steps at its two-day meeting that ends on Friday.
Japan to double direct spending in stimulus package: Nikkei
Japan's government is likely to inject 6 trillion yen ($57 billion) in direct fiscal outlays into the economy over the next few years under a planned stimulus package, double the amount initially planned, the Nikkei newspaper reported on Tuesday.
The Finance Ministry had initially earmarked 3 trillion yen for direct spending from national and local governments under its draft fiscal stimulus plan. But the amount was doubled on requests for bigger spending by government officials and ruling party lawmakers, the Nikkei said without citing sources.
The size of spending could increase further as the government presents the draft stimulus plan for negotiations with ruling party lawmakers from Tuesday, the paper said.
Japan knife attack: At least 19 dead
At least 19 people were killed and 26 injured in a stabbing spree at a facility for disabled people west of Tokyo, making it one of Japan's deadliest mass killings since World War II.
Officer Satomi Kurihara of the Sagamihara Fire Department confirmed the death toll at the Tsukui Yamayurien facility in Sagamihara, a residential area approximately 40 kilometers (25 miles) west of the capital.
Satoshi Uematsu, a 26-year-old who worked at the facility until February, broke in through a window about 2 a.m. Tuesday (1 p.m. ET Monday), Kanagawa Prefecture officials said at a news conference.
Police said they received a call from an employee of the facility reporting the attack, according to state broadcaster NHK.
Oil prices rebounded from over three-month lows
Oil prices rebounded from over three-month lows on Tuesday, lifted by a drop in the dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls.
International Brent crude oil futures LCOc1 were trading at $44.89 per barrel at 0658 GMT, up 17 cents from their last close. U.S. West Texas Intermediate (WTI) crude CLc1 was at $43.21, up 8 cents per barrel
Reference: Reuters,CNN
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