Share

Job market gains not enough to push up rates

Washington - The Federal Reserve has been surprised by how quickly the US labour market is healing but doesn't want to bring forward a planned rate hike until the recovery looks more convincing, according to minutes of its last policy meeting.

Policymakers "generally agreed" improvements in the labour market over the last year had been "greater than expected," according to minutes of the central bank's July 29 to 30 meeting released on Wednesday.

The Fed had said in its policy statement following the meeting that there was "significant" labour market slack, but the minutes showed many members of its policy-setting panel thought this characterisation "might have to change before long."

"Labour market conditions had moved noticeably closer to those viewed as normal in the longer run," the minutes said.

Still, most policymakers felt any change in their view on when to start raising rates "would depend on further information on the trajectories of economic activity, the labour market and inflation."

The minutes also showed Fed officials had largely agreed on many elements of a framework for eventually raising rates from near zero, with almost all of them agreeing it would be appropriate to retain the overnight federal funds rate as their key target.

Almost all of the officials said they would keep targeting a quarter-percentage point range for the federal funds rate, which they have kept between zero and 0.25% since late in 2008.

To establish the upper bound of future target ranges, most policymakers expected to rely on the rate the Fed pays commercial banks on the excess cash they park at the central bank. The bottom of the range would be set at the same rate the bank plans to pay on overnight reverse repurchase operations.

US stock prices trimmed gains after the release of the minutes but quickly recovered the lost ground. At the same time, the US dollar firmed against major currencies and yields for 10-year Treasury notes moved higher.

Interest rate futures continued to point to a first Fed rate hike in July of next year, although the chances of an earlier move ticked slightly higher.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.5%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.51
-0.2%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.15
+0.4%
Palladium
1,000.00
-0.2%
Gold
2,209.06
+0.7%
Silver
24.59
-0.2%
Brent Crude
86.09
-0.2%
Top 40
68,122
+0.7%
All Share
74,310
+0.5%
Resource 10
56,908
+2.2%
Industrial 25
103,615
+0.3%
Financial 15
16,488
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders