Fed credibility test looms as market doubts Sept rate rise

Tokyo

FUTURES traders are starting to bet the Federal Reserve will put off raising interest rates. Janet Yellen shouldn't heed them, said Kay Van-Petersen, a strategist at Saxo Capital Markets.

Contracts on the fed funds rate show traders cut the odds of a September increase by the Fed to 28 per cent on Monday, from 54 per cent on Aug 7. Investors' doubts that the Fed will tighten policy for the first time since 2006 have been fuelled by a rout that erased more than US$5 trillion from the value of global equities since China unexpectedly devalued the yuan on Aug 11, and sent commodity prices to a 16-year low.