FED UNLIKELY TO MAKE MOVE ON RATE

Markets may have calmed down in the past few weeks after extreme volatility rattled investors through much of August and September, but international worries such as a the slowdown in China haven’t gone anywhere.

That’s why the U.S. Federal Reserve is unlikely to make a move on interest rates at its next meeting, which wraps up with a policy announcement on Oct. 28.

Voting members will probably want to see more data on both labour market conditions and inflation, as economic developments outside the U.S. prevented the Fed from raising interest rates at its September meeting.

“Those same concerns will likely cause the Committee to hold policy steady at the October meeting,” said Kevin Logan, U.S. chief economist at HSBC.

“Not enough time has passed since the tumultuous events of July and August to give the policy-makers confidence that uncertainties about the outlook for U.S. growth have diminished or that downward pressure on inflation is abating.”

He highlighted the importance of the employment reports for October and November, along with a potential stabilization in commodity prices and equity markets, and any weakening of the U.S. dollar.

Another thing to watch for is whether Richmond Fed president Jeffrey Lacker dissents from the Federal Open Market Committee’s decision, as he did in September.

If he doesn’t, Logan said that might mean the committee has grown more worried about the negative impact global developments are having on the U.S. economy.