Hurdles preventing Fed from hiking rates have disappeared, says Bullard

The concerns that prevented the US Federal Reserve from hiking interest rates in September have largely disappeared, a top Fed official said on Friday.

According to St Louis Fed President James Bullard, the fears over a “hard landing” in China have abated, as the world’s second largest economy remains close to its annual growth target of 7%, while the volatility that characterised Asian stocks earlier this year has also passed.

“What are the chances of a hard landing in China? The probability of a hard landing in China is no higher today than it was earlier this year,” Bullard said at a conference on economy and policy in St Louis.

On Friday, a report from the Bureau of Labor Statistics, 271,000 jobs were added last month, the biggest monthly gain of the year, meaning the Fed is now expected to hike interest rates in December.

“US labour markets have largely normalised,” he said.

"Everything else is already priced in, including expected European Central Bank QE and expected Fed normalisation.

“Global policy divergence has already been priced into foreign exchange valuations."