By TraderVox.com
Tradervox.com (Dublin) – Speculation that Federal Reserve Chairman will move to have his stimulus package accepted in the next Federal Open Market Committee meeting this week increased after a report from the US Labor department indicated that employment is growing at a slower pace than expected. Brain Jacobsen indicated that the report triggers the FOMC to act sooner than later as the data does not point to substantial improvement. Jacobsen also predicted that the FOMC will hold interest rate close to zero through to late 2014.
According to a Labor Department’s report released on Friday, US employers added a mere 96,000 jobs in August, down from 141,000 jobs in July. This is far lower than the market expectation of 130,000. The report also showed that the unemployment rate fell to 8.1 percent from 8.3 percent, which is against the market expectation of no change on this figure. The report also showed that 386,000 worker left the labor market either due to retirement or layoffs last month. The report triggered global stocks rally with the dollar declining as speculation of stimulus rose. The FOMC meets on September 12-13. Roberto Perli, who is a Managing Director in Washington at International Strategy & Investment Group Inc, said that the results are inconsistent with the Fed’s expectation of progress towards the natural unemployment rate, adding that the current rate will not achieve such results.
The marketing is forecasting the Fed officials to give an unemployment target of 5.2 to 6 percent when they meet this week. The FOMC will also update its economic data and Bernanke is expected to hold a press conference after the meeting. In the previous meeting, the FOMC members were unanimous is agreeing that further stimulus would be necessary unless substantial change was evident in the labor market. In a speech at Jackson Hole Wyoming conference, Fed Chairman Ben S. Bernanke indicated that stimulus package was necessary for the US economy at this moment. According to Yelena Shulyatyeva, QE will be on the table when the FOMC meet this week.
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