The Federal Reserve has stepped up discussions of ways to keep interest rates where it wants to see them, contemplating options that include slowing how quickly it reduces bank reserves in the system.

The Fed’s approach has come under scrutiny after the federal funds rate — the cost of borrowing reserves overnight — targeted by the central bank drifted upward toward the top of policymakers’ prescribed range. 

Minutes to the Fed’s December meeting reveal an extensive discussion of its tools for controlling interest rates, including the possibility of slowing the reduction of bank reserves, amid arguments the fed funds rate could move even higher as the levels of bank reserves gradually decline.

On Wall Street overnight, the S&P 500 shed 0.4 per cent while the dollar index measuring the greenback against a basket of international peers dropped to its lowest level in nearly three months on expectations the Fed would adopt a more cautious policy on rate rises over the coming year.

In Asia-Pacific equities, Sydney’s S&P/ASX 200 rose 0.1 per cent at the open, while futures tip Tokyo’s Topix to dip 0.6 per cent and Hong Kong’s Hang Seng to rise 0.2 per cent when trading begins.

Corporate earnings reports out today include Fast Retailing, Tata Consultancy ServicesSeven & I and FamilyMart.

The economic calendar for Thursday is like clockwork (all times Hong Kong):

  • 07.50: Japan foreign exchange reserves
  • 09.00: Philippines imports, exports and trade balance
  • 09.30: China consumer and producer price indices

Get alerts on Markets when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article