Fed Rate Hike Debate to Intensify This Week: Decision-Day Guide
Last month, FOMC voters unanimously agreed to leave the target range for the U.S. central bank’s policy rate unchanged at 0.25 percent to 0.5 percent amid uncertainty following a sharp deceleration in U.S. job growth in May, and ahead of the British referendum on European Union membership a few days later on June 23.
Now, however, with the combination of a strong rebound in the employment data and stocks at record highs despite U.K. voters’ decision to leave the EU, the voices of those in favor of higher rates are likely to come back to the fore.
How Will Statement Change?
The first paragraph of the FOMC’s post-meeting statement is most ripe for revision, according to Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York.
The June statement noted that “the pace of improvement in the labor market has slowed” and “job gains have diminished,” but that was before a Labor Department report, released July 8, showed employers added 287,000 workers to payrolls in June following net job creation of just 11,000 in May.
"The statement will probably show a better characterization of growth on the back of strong retail sales and job growth," Costerg said.
Abe says Japan to compile $265 billion stimulus, puts policy pressure on BOJ
"The amount is so large that the stimulus package is bound to have a big economic impact. It is impossible to spend this much money in one extra budget, so this may take place over the next few years," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
"The BOJ is likely to ease policy, including increasing government debt purchases, so you could say the BOJ can absorb the new debt. It also makes it easier to show that the BOJ and the government are working together."
Japan is considering issuing 50-year bonds for the first time, the longest maturity of Japanese government debt in the postwar era, to take advantage of the ultralow rates resulting from the Bank of Japan’s monetary easing, people familiar with the matter said.
However, Japan Ministry of Finance says untrue that its considering 50 year bonds
China June industrial profits rise but investment challenges grow
Profits in June rose to 616.31 billion yuan ($92.40 billion), the statistics bureau said on Wednesday. Profits in the mining sector fell 83.6percent in the first half from a year earlier, the National Bureau of Statistics (NBS) said.
Weale Says BOE Stimulus More Likely as Slowdown Signs Mount
Bank of England policy maker Martin Weale said Brexit has rattled the economy more than he anticipated and indicated he now favors immediate stimulus.
After saying last week he needed to see more evidence of a deterioration, his shift follows the publication of Markit’s Purchasing Managers Indexes, which showed business activity plunged to the weakest in seven years after the U.K.’s vote to leave the European Union. Markit said there had been a “dramatic deterioration” since the referendum.
Oil prices dipped today.
Oil prices dipped in Asian trading on Wednesday as plentiful supplies and slowing economic growth weighed on markets, although some analysts said that the current downtrend would be modest and see a recovery later this year.
International Brent crude oil futures were trading at $44.81 at 0148 GMT, down 6 cents from their previous close. US West Texas Intermediate (WTI) crude were at $42.87, down 5 cents.
World Bank on Tuesday raised its forecast for crude oil prices in view of the supply disruptions and strong demand in the second quarter. In its latest quarterly Commodities Markets Outlook report, the Washington-based lender forecast the crude oil prices in 2016 to reach 43 U.S. dollars per barrel, up from its April's forecast of 41 dollars per barrel.
Refernce: Bloomberg,Reuters, MarketWatch,Economic Times
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