Testifying before the House Financial Services Committee, Federal Reserve chairperson Janet Yellen said the Fed may start to raise interest rates in December so long as the US economy remains on a firm footing. However, she assured lawmakers that interest will rise gradually once monetary policy tightening begins. “We have a recovering economy... households are in better shape,” Ms Yellen said.
The US central bank has maintained interest rates near zero since 2008 as policymakers waited for labour markets to move closer to their goal of full employment. A December rate hike remains a possibility despite signs the economy is slowing for the third winter in a row.
In the meantime, retail sales data for the eurozone published by Eurostat show that during September, sales across the currency union edged down by 0.1 per cent month-over-month in September, confounding economists’ expectations for a 0.2 per cent increase. This was the first decline in sales in six months, as spending on food and drinks declined sharply.
In August, sales showed no change. In the meantime, retail sales were flat month-on-month in Germany and declined by 0.4 per cent in France. In the 28 countries that constitute the European Union, sales were up by 0.3 per cent in the month and 3.7 per cent higher year-on-year.
Finally, UK mortgage lender Halifax said last week that house prices in the the country as a whole rose at an annual rate of 9.7 per cent in October, up from 8.6 per cent in September. Month-on-month, house prices rose by 1.1 per cent in October, following a decline of 0.9 per cent during the previous month. Economists had forecast a month-on-month increase of only 0.6 per cent for October.
Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015, Martin Ellis, Halifax housing economist, said.
This report was compiled by Bank of Valletta plc for general information purposes only.