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    JACKSON HOLE, WYO. — Federal Reserve Vice Chairman Stanley Fischer argued Saturday that the persistently low inflation that has plagued the country in recent years could finally begin to reverse, but would likely rise slowly.Speaking at an annual symposium sponsored by the Kansas City Fed in the foothills of the Grand Tetons, Fischer expressed faith in the central bank’s ability to return inflation to its goal of 2 percent, which is generally associated with a healthy economy. But he cautioned that amid wild swings in world financial markets and China’s devaluation of its currency, central bank officials are monitoring the global economy “even more closely than usual.”“In making our monetary policy decisions, we are interested more in where the U.S. economy is heading than in knowing whence it came,” Fischer said. “That is why we need to consider the overall state of the U.S. economy as well as the influence of foreign economies on the U.S. economy as we reach our judgement on whether and how to change monetary policy.”The Fed is facing a momentous decision over whether to begin withdrawing its unprecedented support for the U.S. economy when it meets in Washington next month for its regular policy meeting. The central bank slashed its target interest rate to zero during the depths of the financial crisis in 2008 and has left it there ever since in hopes of fostering a stronger recovery. Over the past year, hiring has been robust and the unemployment rate has dropped to 5.3 percent, leading officials to finally consider the momentous step of raising its benchmark rate.Yet exceedingly low inflation has thrown a wrench into those plans. Government data released Friday showed prices, excluding food and energy, rose just 1.2 percent compared to a year ago — well below the Fed’s goal. In his remarks, Fischer said the stronger U.S. dollar, falling oil prices and weak global demand have weighed on inflation over the past year. But he said many of those factors are beginning to fade.“There is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” Fischer said.But the Fed’s second-in-command stopped short of saying how the recent global turmoil might change the central bank’s price outlook in the near term — and whether that would impact the timing of decision on a rate hike. Following the recent turmoil in global markets, investors increasingly expect the Fed not to move in September. The central bank has said it expects to increase its target rate some time this year, and officials seem divided over when to make the call. In remarks Friday, Fischer indicated no decision has been about a September liftoff. Low inflation typically accompanies weak economic growth.  It makes debt more onerous to pay off and is often associated with stagnant wages. Falling prices as a result of a stronger dollar can also hurt exports.  Academics have been perplexed that prices have not risen even as the recovery strengthens. Fischer said that there was been “no clear evidence” of core prices moving higher in recent years.He pointed to the rise of the dollar over the past year as a key factor holding back inflation through lower import prices. Fed models show a 10 percent spike in the greenback pushes down inflation over the same year as the rise but reduces economic growth in the following year. That means the dollar’s strength this year could restrain U.S. GDP in 2016 and possibly into 2017.In addition, he said a slowdown in China contributed to a drop in commodity prices. Fischer also called the recent decline in energy prices a “largely one-off event.”But other economists have questioned whether the Fed can achieve its target for inflation without providing more stimulus for the economy. Minneapolis Fed President Narayana Kocherlakota has argued against a rate hike this year and for even an even looser stance of Fed policy.“Add up all the shortfalls of inflation,” Kocherlakota said in an interview here. “That can’t be viewed as having been a success on the monetary policy front.”Hedge fund investor Ray Dalio predicted this week that the Fed will unleash major stimulus before it tightens policy significantly. Harvard University economist Lawrence Summers wrote this week in The Washington Post that the economy is in a new normal that will require lower interest rates in the long run — and advocated waiting to raise the Fed’s benchmark rate.“It is far from clear that the next Fed move will be a tightening,” Summers wrote on Twitter.But Saturday, Fischer said that changes to central bank policy trickle slowly through the economy. That’s why the central bank should not wait until inflation reaches 2 percent to begin raising its interest rate target, he said.However, Fischer attempted to shift attention away from that first step. Instead, he pointed out that the Fed will likely be able to take its time bringing rates back to traditional levels.“We will most likely need to proceed cautiously in normalizing the stance of monetary policy,” he said. “The entire path of interest rates matters more than the particular timing of the first increase.”






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    We saw the good, bad and ugly side of fear over the global economy last week. The Dow fell 1,000 points shortly after it opened Monday as global markets nosedived and fears about the scale of China's economic slowdown rippled across the world. The Dow also had its best 2-day rally in its history on Thursday, after finding out that the U.S. economy is doing pretty well.

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    Volatility in global markets and concerns over the possible economic fallout have made the Federal Reserve more uncertain about raising interest rates in September. That's the message emerging from the Fed's policy summit this weekend in Jackson Hole, Wyo. Over the course of the past year, Fed officials have made it clear that they don't want to surprise the markets.

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    By Steve Goldstein and Greg Robb, MarketWatch. There should be plenty of debate when Federal Reserve officials gather in mid-September to determine whether to raise interest rates for the first time since the end of the Great Recession. Between low inflation, market turmoil, continued job growth, a strong second-quarter GDP reading and the impact from China's devaluation of its currency, the decision is no slam dunk.

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    The Federal Reserve could have cut short the Great Recession by a year if it had set a 4 percent inflation target in 1984, but raising the target now would probably do little to help the economy, researchers said on Saturday.

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    For much of her tenure as head of the Federal Reserve, Janet Yellen has been pressured by Republican lawmakers who want the U.S. central bank to adopt a monetary policy rule, a straightforward formula connecting unemployment and inflation to a benchmark interest rate.

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    The topic at the Federal Reserve Bank of Kansas City's annual economic symposium in Jackson Hole, Wyo., is "Inflation Dynamics and Monetary Policy." Pardon the attendees at this year's meeting, which runs through Saturday, if they are feeling a little deflated. This isn't just because Federal Reserve Chairwoman Janet Yellen has chosen not to attend.

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    By Myra P. Saefong and Victor Reklaitis, MarketWatch, Eric Yep. U.S. oil benchmark rallies sharply for a second straight day. Oil futures settled higher on Friday to score a nearly 12% a weekly advance on growing expectations that overall weakness in prices will soon prompt sizable declines in production.

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    One in 9 student loan borrowers would eat a tarantula to pay their debt off faster. And nearly one-third say they would eat only ramen for weeks to more quickly pay off their student loans, according to a new poll. TY KU, an upstart brand, calls it the perfect "après yoga" sip.

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    Dennis Lockhart, the president of the Atlanta Fed, said that chances of a rate hike have come down since earlier in August and are now' 50-50.' "That seems to me to be a reasonable assessment of the situation," Lockhart said in an interview on Bloomberg News. Earlier in August, Lockhart told the Wall Street Journal he was likely to support a rate hike in September. But Lockhart said the market volatility in recent days was a "new" risk factor.

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    Federal Reserve Vice Chair Stanley Fischer says he can't predict yet whether the U.S. central bank will raise interest rates in September. Fischer also said that the storm of market volatility seen in the last week could affect the timing of a liftoff.

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     Alcoa  is a material name that gets a lot of attention, probably because it reports early in the earnings period or because its products have important uses in the global economy. The long-term chart of AA shows both the severity of the 2008-2009 bear market and the subsequent repair process since.

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    The U.S. economy is "insulated" from overseas inflation and deflation pressure from exchange rate movements owing to the fact that most of the world's trade is invoiced in dollars, according to new economic research presented at the Federal Reserve's summit in Jackson Hole. If true, this would ease one concern surrounding prospective Fed rate hikes. Some analysts have argued a U.S. central bank rate hike would cause a deflation scare in the domestic economy as a stronger dollar...

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     Ford stock is up 1.11% to $13.71 in afternoon trading on Friday after auto sales boosted U.S. consumer spending. U.S. consumer spending increased 0.3% in July, 0.2% when adjusted for inflation, according to the Commerce Department, Reuters reports.

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    Though Federal Reserve officials have not come to any decision on whether to hike rates in September, the case was strong before China's currency devaluation, Federal Reserve Vice Chairman Stanley Fischer said on Friday. Fischer responded to the comment from William Dudley, the president of the New York Fed, who said that a September rate hike was less compelling, telling CNBC "it is too early to tell... I wouldn't want to go ahead and decide right now what the case is- more compelling or...

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    There was a "pretty strong case" for a September rate hike before China devalued its currency earlier this month, said Fed Vice Chairman Stanley Fischer on Friday. China's surprise forex decision and the subsequent market turmoil have changed circumstances and could have an impact on the Fed's decision in September, Fischer said in a television interview from Jackson Hole. But he quickly added it was too soon to tell for sure.

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    The yields on Treasury notes spiked Friday after Federal Reserve Chairman Stanley Fischer suggested that the Federal Reserve is still open to raising interest rates at its September meeting. The 10- year yield was up 2.2 basis points on the day to 2.188%, while the two-year yield was up 4.7 basis points to 0.731%. Shorter-term Treasurys are more sensitive to rate-hike expectations.

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    Narayana Kocherlakota, the Minneapolis Fed president, stuck to his outlier view that not only should interest rates not be hiked but further easing should be considered. Speaking to CNBC on the sidelines of the Jackson Hole conference, Kocherlakota said the market volatility represents a signal of concerns over the global economic outlook. "It's another argument for not being hasty in removing accommodation," said Kocherlakota, the retiring official who doesn't have a vote...