Fed's Dudley urges caution on rate hikes, cites risks to U.S.
The Federal Reserve should be cautious in considering an interest rate increase due to lingering risks to the U.S. economy, one of the central bank's most influential policymakers said on Monday, appearing to signal the chance of a hike by the end of the year was fading.
While New York Fed President William Dudley said it was "premature" to rule out a policy tightening in 2016, he added that negative shocks were more likely than positive ones due to the unknown fallout from Britain's vote to leave the European Union, a strong dollar, and because it was safer to delay a move with rates so low.
"The risks to growth from Brexit and other international developments could fade away. If such events were to occur, this might necessitate an even faster pace of adjustment," he said.
"It's premature to rule out further monetary policy tightening this year. It depends on the data, broadly defined, and as we all know, that's not something one can predict with any great accuracy," he said.
Dudley called the recent U.S. GDP reading of 1.2 percent annualized growth for the second quarter as "sluggish" but stuck to his expectation that the economy would rebound to about 2 percent growth over the next 18 months, and said he was confident inflation would rise to the Fed's 2 percent goal in the medium term.
He added that aggressive monetary easing in Japan and Europe this year boosted the dollar and, together, helped convince the Fed it could not raise rates as aggressively as it imagined back in December.
Dollar nurses losses after hit from downbeat GDP report
The dollar on Monday pulled away from lows it hit following disappointing U.S. growth figures late last week while the yen pared some its large gains made after the Bank of Japan's smaller-than-expected stimulus steps.
The dollar index, which tracks the greenback against a basket of six rival currencies, was up 0.1 percent at 95.654 .DXY, crawling away from its Friday low of 95.384, its lowest since July 5.
Oil rises after month of steady decline but oversupply still weighs
Oil rose on Monday, driven by new orders as traders staked out positions at the start of the new month, but the market remains dogged by plentiful crude supplies, a flood of refined products, and a weakening economic outlook.
Brent crude was at $43.72 per barrel at 0440 GMT (12:40 a.m. ET), up 19 cents from its last close in July, when it lost 12 percent over the month.
Reference: Investing, Reuters,CNBC
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