Fed's Quarles Favors Gradual Hikes With Eye on Potential Growth

US trade deficit with China has quadrupled since 2001

US shies away from calling China a currency manipulator

Oanda analyst Craig Erlam said the Fed minutes re-affirmed the widely held opinion at the USA central bank that interest rates have further to rise, including another hike this year. That was then, this is now.

Participants in the Fed's rate-setting committee also "generally anticipated that further gradual increases" in short-term borrowing costs "would most likely be consistent" with the kind of continued economic expansion, labor market strength, and firm inflation that a lot of them are anticipating, the minutes showed. The rate helps determine what consumers pay on their mortgages, credit cards and other borrowing.

"The job of the Fed is to remain focused on the facts of the economy and be independent from the administration", Quarles said. "What we need to do is to get ourselves well-positioned so whatever may come we can adjust to that".

The United States on Wednesday (Oct 17) again declined to call China a currency manipulator but said the yuan's fall and Beijing's exchange practices were of "particular concern". But they did show that all Fed officials favored gradual rate increases. Should they see a long term detrimental effect, they can change their course accordingly.

Rising interest rates may reach a level that matches U.S. President Donald Trump's relationship with the media. That will eventually command a reduction in USA interest rates.

Stronger US currency makes American exports more costly to foreign buyers, possibly weighing on growth, and makes many debt payments more costly for foreign borrowers.

YES: Rising interest rates are rarely a friend to a healthy economy and to the stock market.

Sealed Air Corp shares tumbled 8.1 percent after the packaging company lowered its full-year profit outlook due to higher-than-expected raw material and freight costs.

In prepared remarks for an appearance at the Economic Club of Memphis, Bullard laid out a new version of the argument by introducing an updated version of a standard monetary policy "Taylor Rule" that accounts for both the modern drift down in market interest rates, weak current inflation, and weak expectations among investors about future inflation.

The yield on the benchmark 10-year Treasuries jumped 3-1/2 basis points to 3.215 percent, the super-long 30-year bond yields also surged 3-1/2 basis points to 3.381 percent and the yield on the short-term 2-year traded 2 basis points higher at 2.903 percent by 10:30GMT.

In 2015, under Janet Yellen, the Federal Reserve started to a process of normalizing interest rates. This measured approach is already affecting some sections of the economy including housing and auto sales.

NO: The Federal Reserve is not being too aggressive with rates.

In theory, Trump's concern that the Fed could potentially threaten economic growth isn't without cause.

However, some members highlighted the chances of further instability among emerging markets, which have been battered in recent months by a flight of capital to the U.S. and fuelling concerns of contagion that could throw the global economy off track.

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