Fed Sets Up Move in December While Leaving Rates on Hold
Federal Reserve policy makers left interest rates unchanged while saying the argument for higher borrowing costs strengthened further amid accelerating inflation, reinforcing expectations for a hike next month.
“The committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. The decision was 8-2.
The central bank on Wednesday offered an assessment of the economy that was broadly similar to its September statement, reiterating that the “labor market has continued to strengthen and growth of economic activity has picked up” since the first half.
Fed officials revealed growing confidence that inflation is on track to reach their 2 percent target. The central bank said Wednesday that the pace of price gains “has increased somewhat since earlier this year” and that market-based measures of inflation compensation “have moved up.” The committee also omitted previous language saying inflation would probably “remain low in the near term.”
Cleveland Fed President Loretta Mester and Kansas City Fed chief Esther George, two of the three officials who dissented at the committee’s September session, repeated their objection, calling for raising the federal funds target by a quarter percentage point from its current range of 0.25 percent to 0.5 percent. The third, Boston Fed President Eric Rosengren, opted to support Wednesday’s decision to hold rates steady.
Private companies created 147,000 jobs in Oct vs 165,000 jobs expected: ADP
Private sector employment rose by 147,000 jobs in October, falling short of estimates on Wednesday. This marks the smallest increase since May and the third worst report in the past year.
Companies in the private sector were expected to create 165,000 jobs in October, according to economists polled by Reuters.
ADP also revised job creation numbers for other months as part of a new measuring model. For September, the number of total jobs added was revised up to 202,000, from a previous estimate of 154,000. Over the course of a year, the new model subtracted a net of 15,000 jobs.
The new ADP model also shows 32,000 fewer jobs than the number the Bureau of Labor Statistics reported in the private sector over the same period. The old ADP model showed 17,000 fewer jobs than reported by the BLS.
Mark Zandi, chief economist of Moody's Analytics, described job growth in the private sector as "strong," even if the pace of growth appears to be slowing.
"Behind the slowdown is businesses' difficulty filling open positions," Zandi said in a release. "However, there is some weakness in construction, education, and mining."
Oil prices tumble 3 percent on record U.S. crude build
Oil prices tumbled 3 percent on Wednesday after a record weekly build in U.S. crude inventories stoked investor worries about a global supply glut, days after analysts estimated higher monthly OPEC crude output.
The U.S. Energy Information Administration (EIA) said crude inventories rose 14.4 million barrels for the week ended Oct. 28, far more than the 1.0 million barrels analysts had expected. It was the biggest weekly rise in U.S. crude stocks since records began in 1982, and exceeded the American Petroleum Institute's report on Tuesday of a 9.3 million-barrel build. [EIA/S]
U.S. West Texas Intermediate (WTI) crude CLc1 settled down by $1.33, or 2.9 percent, at $45.34 a barrel. It broke the $45 support earlier, sinking to a five-week low of $44.96.
Reference: Reuters, CNBC, Bloomberg
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