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| Global market turmoil makes planned interest rate rise 'less compelling' | Global market turmoil makes planned interest rate rise 'less compelling' |
| (35 minutes later) | |
| The global turmoil in stock markets has made a September interest rates rise “less compelling”, an influential policymaker at the Federal Reserve said on Wednesday. | The global turmoil in stock markets has made a September interest rates rise “less compelling”, an influential policymaker at the Federal Reserve said on Wednesday. |
| Bill Dudley, the president of the New York Federal Reserve and a key member of the US central bank’s rate setting committee, said: “The decision to begin the normalization process at the September FOMC [Federal Open Market Committee] meeting seems less compelling to me than it was a few weeks ago.” | |
| Dudley’s comments, at a press conference in New York, came as US stock markets lost most the gains they made in morning trading. The Dow Jones Industrial Average was up 212 points (1.35%) at 12pm, falling back from opening up over 400 points. The S&P 500 was up 22.5 points (1.19%), from opening up 46.5 points. The Nasdaq was up 58.1 points (1.26%), down from a 135-point rise. | Dudley’s comments, at a press conference in New York, came as US stock markets lost most the gains they made in morning trading. The Dow Jones Industrial Average was up 212 points (1.35%) at 12pm, falling back from opening up over 400 points. The S&P 500 was up 22.5 points (1.19%), from opening up 46.5 points. The Nasdaq was up 58.1 points (1.26%), down from a 135-point rise. |
| European stocks also fell at the close on the other side of the Atlantic. The FTSE 100 index of blue-chip shares closed down 102 points to 5,979. It has now fallen for 11 of the last 12 days (on Tuesday it jumped by 188 points), and is currently 15% off its record high. | European stocks also fell at the close on the other side of the Atlantic. The FTSE 100 index of blue-chip shares closed down 102 points to 5,979. It has now fallen for 11 of the last 12 days (on Tuesday it jumped by 188 points), and is currently 15% off its record high. |
| Germany’s DAX and Spain’s IBEX both lost 1.3%, and the French CAC dropped 1.4%. | Germany’s DAX and Spain’s IBEX both lost 1.3%, and the French CAC dropped 1.4%. |
| In China a rally on the Shanghai Composite index collapsed and the market closed down another 1.3%, to its lowest level since December. Over the past three days the index has lost close to a quarter of its value. | In China a rally on the Shanghai Composite index collapsed and the market closed down another 1.3%, to its lowest level since December. Over the past three days the index has lost close to a quarter of its value. |
| Dudley, a dovish policymaker and close ally of Fed chairwoman Janet Yellen, did leave the door open to raising rates for the first time in nearly a decade when the US central bank holds a policy meeting 16-17 September. He said a rate hike “could become more compelling by the time of the meeting as we get additional information on how the US economy is performing and … international financial market developments, all of which are important to shaping the US economic outlook”. | Dudley, a dovish policymaker and close ally of Fed chairwoman Janet Yellen, did leave the door open to raising rates for the first time in nearly a decade when the US central bank holds a policy meeting 16-17 September. He said a rate hike “could become more compelling by the time of the meeting as we get additional information on how the US economy is performing and … international financial market developments, all of which are important to shaping the US economic outlook”. |
| It comes after Lawrence Summers, a former US treasury secretary, warned that raising rates soon would be a “serious error” and raised the prospect of restarting quantitative easing. | It comes after Lawrence Summers, a former US treasury secretary, warned that raising rates soon would be a “serious error” and raised the prospect of restarting quantitative easing. |
| “A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives: price stability, full employment and financial stability,” Summers said in an opinion piece for the Wall Street Journal. | “A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives: price stability, full employment and financial stability,” Summers said in an opinion piece for the Wall Street Journal. |
| He also posted on Twitter to warn that “we could be in the early stage of a very serious situation”. | He also posted on Twitter to warn that “we could be in the early stage of a very serious situation”. |
| Economists at Barclays have also pushed back their forecast for a rate rise from next month to March. | Economists at Barclays have also pushed back their forecast for a rate rise from next month to March. |