The Federal Reserve is getting more dovish in the face of weak inflation data, reducing the likelihood of a third rate hike this year, which traders already see as very unlikely.
Three Fed policymakers on Tuesday expressed doubts about further rate hikes, with one influential policymaker calling for a delay in raising U.S. interest rates until the Fed is confident inflation will rebound.
A second Fed policymaker blamed the Fed’s rate hikes to date not only for weak inflation, but also for undermining the recovery in the labor market that many policymakers including Fed Chair Janet Yellen have cited as they have justified raising rates. Late Tuesday a third policymaker advocated patience on rate hikes, given slow growth and inflation.
Taken together, the comments from one third of the Fed’s current policy-setting panel suggest that months of falling or flat inflation readings could scuttle plans to raise rates once more this year and three times next year. Fed policymakers next meet Sept. 19-20and are due to release fresh economic forecasts that may envision a flatter path for rate hikes ahead.
Reference: Reuters
Read More: http://www.reuters.com/
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