The Federal Reserve should be cautious on interest rate increases due to lingering risks to the U.S. economy, one of its most influential policymakers said today, appearing to signal the chance of a hike by the end of the year was fading.
Global stocks hit their highest in almost a year today as investors pared back expectations of when U.S. interest rates would rise, although a fall in bank shares after stress tests took the shine off European shares.
The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.
The dollar held within sight of recent highs against the euro and yen today ahead of meetings of U.S. Federal Reserve and the Bank of Japan that investors on balance expect to be positive for the greenback.
Central banks from Washington to Tokyo take center stage next week, although policymakers are likely to remain cautious as they wait for the dust to settle from Britain's shock vote to leave the European Union.