How confident are you on interest rates?

Jackson Hole, Wyoming: The chair of the US Federal Reserve has been downplaying expectations that the central bank will raise interest rates over the coming months. But the new head of the European Central Bank has already flagged how she wants to ease back on its bond-buying programme. And San Francisco Fed President John Williams has said the US central bank is going to “grapple” with a quicker bond-buying taper over the next year.

While Federal Reserve Chair Janet Yellen tried to downplay the interest-rate hike possibility for the Fed’s meeting this week, everyone else at the same gathering in Jackson Hole, Wyoming, was anticipating the Fed tightening rates again later this year. Williams, who took part in a discussion with Ms Yellen and two other Fed officials, made clear that the Fed is only a step from moving to raise interest rates. Williams said the Fed will closely monitor inflation, saying that even the current level of inflation is “worrisome.” Last month, the Fed said the economy was continuing to expand, unemployment was low and economic growth was strengthening. That marked a new phase in the Fed’s campaign to tighten monetary policy, and the central bank lifted its benchmark lending rate to a range of between 1% and 1.25%.

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