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- U.S. Federal Reserve officials lined up behind a likely December interest rate hike with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero. Other Fed policymakers argued that inflation should rebound, allowing the Fed to soon lift rates from near zero though probably proceed gradually after that. In New York, William Dudley said: “I see the risks right now of moving too quickly versus moving too slowly as nearly balanced.” Dudley, said the decision, still required the central bank to “think carefully” because of the risk that the United States is facing chronically slower growth and low inflation that would justify continued low rates. But his assessment of “nearly balanced” risks represents a subtle shift in the thinking of a Fed member who has been hesitant to commit to a rate hike, but now sees evidence accumulating in favor of one. For much of Janet Yellen’s tenure as Fed chair, policymakers at the core of the committee, and Yellen herself, have said they would rather delay a rate hike and battle inflation than hike too soon and brake the recovery. But Dudley said the current 5 percent unemployment rate “could fall to an unsustainably low level” that threatens inflation, while seven years of near-zero rates “may be distorting financial markets.”
- U.S. crude fell for the third session in a row on Friday to trade at the lowest in more than two months, as a relentless climb in oil stockpiles helped trigger a 10 percent drop in prices since the beginning of November. Oil markets have been dogged by oversupply, which analysts estimate to be between 0.7 and 2.5 million barrels of oil being produced every day without a buyer, and which has resulted in prices falling by almost two-thirds since June 2014. On Thursday morning, the U.S. EIA said in its Weekly Petroleum Report that crude inventories nationwide increased by 4.2 million barrels for the week ending November 6. At 487.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. While analysts only anticipated a slight build of 0.75 million barrels, investors anticipated a much sharper increase after the American Petroleum Institute reported a weekly gain of 6.3 million barrels on Tuesday evening. Within the report, motor gas inventories decreased by 2.1 million barrels while distillate fuel inventories increased by 0.4 million last week. Meanwhile, crude production for the week increased by 25,000 barrels per day to 9.185 million. Crude output still remains considerably below its level from this spring when it surged above 9.6 million bpd to reach its highest level in more than 40 years.
- The United States posted a budget deficit of $136 billion, up 12 percent from the same period last year, the Treasury Department said on Thursday. Analysts polled by Reuters had expected a $130 billion deficit for last month. The government had a deficit of $122 billion in October of 2014, according to Treasury’s monthly budget statement.
- U.S. inflation should rebound next year, the Federal Reserve’s second-in-command said on Thursday, as he noted that the central bank could move next month to raise interest rates. The comments by Fed Vice Chairman Stanley Fischer could be taken as yet another signal the central bank is less willing to let low inflation further delay policy tightening. He said the economy has done well reasonably well thanks in part to a delay in interest-rate hikes. It has been nearly a decade since the Fed last raised rates. Reinforcing previously stated confidence that more inflation was around the corner, Fischer said he expects the central bank’s preferred measure to rebound to 1.5 percent next year and to hit a 2 percent goal in the “medium term”.