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Fed rate hike and Chinese growth concerns in the limelight – Lloyds Bank

FXStreet (Delhi) – Nikesh Sawjani, Economist at Lloyds Bank, expects that concerns about the Chinese economy and speculation over when the Fed will begin to raise interest rates are likely to continue to remain the dominant immediate issues for markets.

Key Quotes

“While the overnight release of Chinese data are unlikely to have materially altered ongoing speculation of further bouts of easing from the People’s Bank of China, the reported health of the Chinese economy remains a key influence over the outlook for US monetary policy.”

“Recent comments from Fed Governors Brainard and Tarullo have raised further doubts over the likelihood of a rate hike in 2015. Both Governors highlighted the prolonged weakness of US inflation and openly questioned the idea that the tightening labour market was, at the moment, a useful sign of mounting price pressures.”

“Given the backdrop of a light US data calendar and with the October 28 policy decision coming into view, remarks tomorrow by Governor Powell and New York Fed President Dudley are likely to attract considerable attention.”

“For today, however, speeches by Fed Governor Brainard and Richmond Fed president Lacker provide the focus. Yet, with views from both of these FOMC members already well vocalised and the topics for the respective events largely unrelated to monetary policy, it is unlikely that they will provide much insight.”

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