News Archive


China, Hong Kong stocks pull back following recent rally


SHANGHAI China stocks corrected on Monday morning after a 10 percent rally over the past two sessions, as regulators took fresh measures to crack down on speculation and trading misbehaviors.

The blue-chip CSI300 index .CSI300 fell 2.8 percent, to 3,247.39 points at the end of the morning session, while the Shanghai Composite Index .SSEC lost 2.6 percent, to 3,148.08 points.

Both indexes are set to fall over 14 percent for the month, their third straight monthly declines.

Trading in index futures CIFc1 was relatively calm compared with last week, after regulators took additional steps over the weekend to restrict speculative trading.

Hong Kong stocks also fell after losing the bounce seen late last week.

“A pull back in the market was to be expected as some investors are taking profits after the two days rally,” wrote Gerry Alfonso, director of Shenwan Hongyuan Securities.

“Investors seem to be waiting until the manufacturing PMI figure is released later this week before making significant decisions.”

Investors remained worried over the health of the economy, as first-half profit growth at China’s listed companies slowed to 8.7 percent, from 10 percent a year earlier, official Shanghai Securities News reported on Monday.

Reflecting waning risk appetite, outstanding margin loans – money investors borrow to buy stocks – fell for the ninth consecutive session on Friday in Shanghai to 683.1 billion yuan, reaching the lowest level since December.

Chinese state media announced a slew of confessions on Monday following investigations into recent stock market gyrations, including from a detained reporter who admitted to spreading false information that caused “panic and disorder”.

In separate cases, an official from China’s securities regulator, and four senior executives from CITIC Securities (600030.SS) (6030.HK) confessed to insider trading, Xinhua reported.

Shares of CITIC Securities plunged 7.9 percent in Shanghai, and 5.1 percent in Hong Kong, triggering a sell-off in the brokerage sector.

Shares of banking heavyweights .CSI300BI remained under selling pressure, after China Construction Bank (601939.SS) (0939.HK) on Sunday reported almost zero profit growth in the first half, joining its state-owned rivals in painting a bleak picture for the sector.

In Hong Kong, the Hang Seng index .HSI dropped 0.8 percent, to 21,446.44 points, while the Hong Kong China Enterprises Index .HSCE lost 1.6 percent, to 9,593.42.

All main sectors lost ground in the city.

(Samuel Shen and Pete Sweeney; Editing by SImon Cameron-Moore)

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China’s yuan up on suspected intervention, set for August loss


SHANGHAI, China’s yuan firmed on Monday after the central bank set a stronger guidance rate while it also appeared to continue using state-owned banks to support the Chinese currency, traders said.

For August, the currency is set to depreciate 2.7 percent if it closes at the midday level. Most of the losses came after the People’s Bank of China (PBOC) surprised markets by devaluing the yuan by nearly 2 percent on Aug. 11.

“Major state-owned banks bought a large amount of yuan this morning,” said a trader at an Asian bank in Shanghai.

These banks were suspected of intervening on behalf of the central bank around 6.38 against the dollar, several traders said.

The PBOC set the midpoint rate CNY=SAEC at 6.3893 per dollar prior to market open, 0.15 percent firmer than the previous fix 6.3986.

The spot market CNY=CFXS opened at 6.3890 per dollar and was changing hands at 6.3805 at midday, 0.13 percent stronger than the previous close.

After the abrupt devaluation on Aug. 11, Beijing appears to have been so surprised by the global reaction that it tends to keep the yuan on a tight leash to head off a currency war that could spark a broader financial crisis, policy insiders say.

Premier Li Keqiang reiterated at the weekend earlier remarks that there’s no basis for continued depreciation of the yuan following its devaluation.

The yuan “will stay basically stable as a reasonable and balanced level,” he said. Most market watchers, however, believe there is political pressure for it to weaken further to support exports and reflecting expectations of further policy easing.

The offshore yuan CNH=D3 was trading 1.03 percent weaker than the onshore spot at 6.4469 per dollar by midday.

Offshore one-year non-deliverable forwards contracts CNY1YNDFOR=, considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.6075, or 3.30 percent weaker than Monday’s midpoint.

(Reporting by the Shanghai Newroom; Editing by Jacqueline Wong)

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Carlyle’s nominee on China Fishery’s board steps down


SINGAPORE Carlyle Group’s nominee on the board of China Fishery Group (CNFG.SI) has stepped down, a few months after the U.S. private equity firm declined to take part in the Singapore-listed company’s rights issue.

Patrick Siewert resigned as a non-executive director from August 29, China Fishery said on Monday.

Carlyle’s stake in China Fishery fell from 11.1 percent to 6.2 percent following a rights issue earlier this year.

China Fishery cited the reduced stake and competing commitments as reasons for Siewart’s departure from the board.

His alternate director, Janine Feng Junyuan, also stepped down.

Shares of China Fishery and its parent, Pacific Andes International Holdings (1174.HK), have come under pressure following last month’s announcement that the companies were facing a probe by the Monetary Authority of Singapore and Singapore’s white-collar police for an offence under the securities and futures act.

(Reporting by Saeed Azhar; Editing by Stephen Coates)

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World to Fed: We’re prepared for U.S. rate hike, so don’t delay


JACKSON HOLE, Wyo. Central bankers from around the world are telling their American counterparts that they are ready for a U.S. interest rate hike and would prefer that the Federal Reserve make the move without further ado.

In private and in public at last week’s global central banking conference in Jackson Hole, the message from visiting policymakers was that the Fed has telegraphed an initial monetary tightening and, following a year-long rise in the dollar, financial markets globally are as ready as they can be.

The powerful group gathered at the end of a roller-coaster week in markets in which the Dow tanked by 1,000 points on Monday on concerns of a slowdown in China but recovered to trade higher by the end of the week. Remarks by Fed officials that liftoff could come in September were blamed by some for that volatility.

But for Agustin Carstens, the top central banker in Mexico, a rate hike by his neighbor sends an encouraging sign of economic health, even if it does force growth-challenged Mexico to also raise rates within days.

“If the Fed tightens, it will be due to the fact that they have a perception that inflation is drifting up, but more important that unemployment is falling and the economy is recovering,” Carstens told Reuters in an interview.

“For us, that is very good news,” he added.

While Yao Yudong, head of the People’s Bank of China Research Institute of Finance and Banking, last week blamed the Fed for the market turmoil and said a U.S. hike should be delayed, most central bankers from emerging markets contacted by Reuters at Jackson Hole and over the past month shared Carstens’ view.

An end to more than six years of rock bottom U.S. rates will touch off a wave of potentially painful adjustments as countries deal with the likelihood of an even stronger dollar as well as capital outflows from some emerging markets and changes in the relative prices of traded goods. An end to uncertainty for policymakers, however, could outweigh those difficulties.

Effects of the Fed’s easy money have been felt in countries as diverse as Chile and Switzerland. Annual inflation in Chile has consistently come in above the bank’s target range of 2 percent to 4 percent.

In Switzerland, the central bank has been forced to keep rates negative since it removed its cap on the franc at 1.20 to the euro, sending the currency soaring and putting a major strain on the export-dependent Swiss economy.

  “Latin America has seen a surge of inflation” as countries “internalize” the evolution of Fed policy, Central Bank of Chile Governor Rodrigo Vergara told the conference.

TWO YEARS OF PREPARATION

Those sorts of trends have been under way for some two years, when then Fed chairman Ben Bernanke set off a global “taper tantrum” when he suggested the central bank was preparing to scale back its bond-buying program.

Two years after the taper tantrum, Fed officials say some volatility is unavoidable when the shift in policy occurs.

“For emerging markets, the smaller economies, they’re often looking for a weaker currency. So from their perspective a tightening move by the Fed might be helpful to weaken their currency and help them do what they want to do,” St. Louis Fed President James Bullard said in an interview.

There are opponents to a hike – most notably the People’s Bank of China and the International Monetary Fund, which has urged the Fed to delay until the world economy is on a stronger footing.

But even frequent Fed critics said at Jackson Hole that the time was coming to hike.

“It’s a long anticipated event,” Reserve Bank of India Governor Raghuram Rajan said on a conference panel, sitting alongside Fed Vice Chairman Stanley Fischer. “It has to happen some time – everybody knows it has to happen – but pick your time.”

Those comments were supported by central bankers from Japan, South Korea and Indonesia. When asked earlier this month whether he thought the Fed should hike in September, Bank Indonesia Senior Deputy Governor Mirza Adityaswara told Reuters in Jakarta: “The more certainty there is, the better.”

A senior South Korean policymaker echoed that sentiment.

“A lift at an already expected timing would be better in a sense that it clears up one of the big uncertainties over the issue and it would mean the U.S. economic recovery is deemed sustainable,” he said, speaking on condition of anonymity

as he was not authorized to comment publicly by the Bank of Korea.

(Additional reporting by Reuters bureaux in Seoul, Jakarta and Bangkok; Editing by David Chance and Mary Milliken)

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Paypal seen rising 40 percent from post spinoff lows: Barron’s


NEW YORK PayPal Holdings Inc (PYPL.O), the e-commerce group trading sharply off its recent offering price, could rise 40 percent to $46 a share if it succeeds with investments tied to payments systems innovation, the Aug. 31 edition of Barron’s said.

Spun off in July by auctioneer eBay Inc (EBAY.O), PayPal is now clear to do deals with big vendors like Staples and move into back office operations and other services, according to Barron’s.

PayPal shares last week traded at $34.60, or over $4 less than its offering price in July, Barron’s said.

(Reporting By Michael Connor in New York; Editing by Marguerita Choy)

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Boeing uses its clout to control supplier consolidation


NEW YORK Berkshire Hathaway Inc’s $37 billion deal for aerospace supplier Precision Castparts Corp is encouraging investors to consolidate the fragmented aircraft components industry, even as Boeing Co uses its clout as the world’s biggest plane maker to put a check on some deals.

Berkshire chief Warren Buffett isn’t alone in seeing potential for profits from rising demand for commercial aircraft. Private equity and strategic buyers have been pouring into the sector, and foreign companies such as China’s AVIC and Senior PLC of the UK have recently been prowling for deals, bankers and company executives said.

Potentially standing in their way, though, is Boeing, these people said. Boeing is the biggest customer of most aerospace suppliers, and is slowing some acquisitions by using its power to approve the transfer of its supply contracts from one owner to another.

Boeing can act like as an unofficial regulator on aerospace mergers and acquisitions because of the “assignability clause” inserted in most of its contracts with suppliers. The clause allows Boeing to refuse to transfer the contracts to the new owners, giving it a de facto veto over deals.

Boeing said it hasn’t changed the process it uses to scrutinize mergers and acquisitions among suppliers, and that the time taken depends on the size and complexity of the deal. Chief Executive Dennis Muilenburg, who took over July 1, is continuing predecessor Jim McNerney’s policy of “de-risking.”

“We have an ability to have our voice heard in the MA process and we use that ability,” said Kent Fisher, vice president and general manager of suppliers at Boeing Commercial Airplanes.

But bankers and company owners said approvals from Boeing that used to take a couple of weeks now take much longer, putting deals at risk, with no explanation from Boeing for the delay.

“Any time you have a pause in a transaction, it increases the risk that it won’t get across the finish line,” said Brian Murphy, a managing director at Meridian Capital, an investment bank based in Seattle.

For example, Boeing took four months to approve the purchase of a small supplier by Liberty Hall Capital Partners, a New York private equity firm focused on aerospace and defense.

LaCroix Industries, which has 45 employees and was founded in Kent, Washington, in 1977, has long supplied parts directly to Boeing for the 737, 777 and 787 jets. It earned awards from Boeing for near-perfect quality the last seven years, co-founder Philip LaCroix said.

The company began talks with Liberty Hall last September, and sought Boeing’s blessing in April, he said. Boeing took until July to consent, and the deal closed that month.

   

MAJOR SLOWDOWN

“The approvals from Boeing were the major slowdown” and Boeing wouldn’t say what was causing the delay, LaCroix said in an interview. 

“That part of it was frustrating,” he said. “You could lose a deal over something like that, where the acquirer says, ‘Hey, I’m out of this.'”

Liberty Hall declined to comment. It plans to integrate LaCroix into its Irving, Texas-based Accurus Aerospace Corp subsidiary, which also supplies Boeing. 

LaCroix had already agreed to give Boeing 15 percent price cuts on existing contracts, starting in 2016. The alternative was slow death by losing the right to bid on future work, LaCroix said. 

“Staying in business with Boeing was much preferable,” he said, “and still had plenty of profit for us.”

Some bankers say they routinely exclude potential bidders for a company if they know those won’t pass muster with Boeing, which looks at financial strength, track record and investment intentions of prospective buyers. Some also see the logic of talking with Boeing about meeting assignability requirements, and understand Boeing’s need to minimize supply chain risk.

“Reviewing the companies that would acquire their suppliers is part of that,” said Jet Wales, a managing director at Moss Adams Capital in Seattle.

MORE INVESTMENT, MORE RISK

North American aerospace and defense deals shot up 17 percent last year and their value nearly doubled to about $12 billion, Thomson Reuters data show. Private equity buyers are involved in an increasing number of transactions, according to data from PitchBook, a Seattle firm that tracks transactions, fueling competition for choice targets.

The big attraction: Boeing’s eight-year backlog of commercial jet orders worth $431 billion. Investors see an assured revenue stream and have bid up the prices of supplier companies to lofty levels.

Ownership changes can increase risk, however. A stumble by a key supplier can disrupt Boeing’s carefully orchestrated factories and run up hefty costs.

When Zodiac Aerospace of France failed to deliver premium seats earlier this year, it delayed delivery of 787s to American Airlines and hit Boeing with what analysts said were several hundred million dollars in added costs. Boeing said those estimates are overstated.

Many experts expect Buffett’s aerospace purchase will spur even more consolidation, and likely will prompt Boeing to look even more closely at deals that affect its suppliers.    

Precision Castparts, a 60-year-old firm based in Portland, Oregon, locked up key aerospace products and production capabilities by doing its own strategic acquisitions. It is now an integral supplier of parts for commercial and military aircraft and engines.

“Boeing woke up to the fact after the fact,” said Christian Schiller, a managing director at Cascadia Capital investment bank in Seattle, referring to Precision’s success in achieving vertical integration. “They couldn’t undo it, so they’re making sure they can exert more control over the MA process to make sure a PCC doesn’t happen again.”

He and other bankers said Boeing has a legitimate need to protect its interests and avoid the rise of another powerful supplier.

“But Boeing should make it easier for the smaller deals to go forward,” Schiller said. “There’s no need to take really hard looks at $10 million to $100 million deals.”

Boeing subjects even small deals to detailed scrutiny, such as the 2013 purchase by Kidd Co and Centerfield Capital Partners of Imaginetics Inc, then a 120-person precision machining shop in Auburn, Washington, a top supplier to Boeing. Approval took more than a month, said a source familiar with the deal. Imaginetics declined to comment.

“Boeing has turned up the heat on who is the buyer and is taking longer to decide that a deal is OK,” said Michael Black, a principal at Zachary Scott, an investment bank in Seattle.

“They’ve got a pretty tough filter and it’s gotten tougher and I don’t see that changing.”

(Reporting by Alwyn Scott. Editing by Joe White and John Pickering.)

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Suzuki Motor says it will buy back VW stake as court settles feud


TOKYO Japan’s Suzuki Motor Corp said on Sunday it will buy back the 19.9 percent stake it sold to Volkswagen AG after an international arbitration court settled a dispute between the automakers over their failed partnership.

Suzuki (7269.T) filed for international arbitration in November 2011, after Volkswagen (VOWG_p.DE) refused to sell back the shares in Suzuki it acquired in January 2010 for 1.7 billion euros ($1.90 billion).

The stake was worth some $3.8 billion at Friday’s closing price.

Both companies said they welcomed the clarity offered by the ruling from the International Court of Arbitration of the International Chamber of Commerce, which partially upheld the German company’s counterclaims of breach of contract.

“It used to feel as if a small bone were stuck in my throat,” Suzuki Chairman and Chief Executive Osamu Suzuki told a news conference. “I feel so refreshed now.”

Suzuki said it foresees no impact on its full-year earnings.

VW said in a statement it would not know the impact on its balance sheet or profits until it has coordinated the sale of the Suzuki shares. “We have already retained an investment bank and will in the next few days consult with the bank and our lawyers over the next steps to be taken.”

U.S. hedge fund mogul Daniel Loeb urged Suzuki to cancel the shares it buys back, saying the Japanese automaker has enough cash on hand and should avoid issuing equity which would hurt existing shareholders.

Loeb sent Suzuki shares soaring early this month by disclosing his Third Point LLC fund held a stake. He said at the time the stock was cheap and that the expected resolution of the VW dispute would allow it to make better use of its cash.

In a phone call with a small number of media outlets early on Monday Japan time, Loeb said Suzuki should buy the shares from the German giant at a price not too far from the current price.

Suzuki said it expects to buy back its shares at a “reasonable” price, though it did not specify what that price would be.

Takaki Nakanishi, chief executive of Nakanishi Research Institute, which specializes in the automotive industry, said it was “highly likely it will buy back at the Friday closing price.”

“For Suzuki, this isn’t that much money,” he added. Suzuki had nearly 1 trillion yen in cash reserves as of the end of March.

Loeb did not mention other specific measures he expected from Suzuki but said he saw a cancellation as a “first next step”. He said he would be happy to meet with management to discuss other “shareholder-friendly steps” to better allocate capital, adding that he had no plans to sell the shares yet.

“At this valuation we’re happy to continue holding,” he said. Third Point has not disclosed the size of its Suzuki stake. Japanese regulation requires ownership of 5 percent or more to be declared.

VW held 111.61 million Suzuki shares as of March 31, worth 463 billion yen ($3.81 billion) at Friday’s closing price of 4,151.5 yen.

The two carmakers agreed to tie up in December 2009, pledging to cooperate on technology such as hybrid and electric cars and on expanding in emerging economies.

But the union soured as Suzuki accused VW of withholding hybrid technology it promised to share. VW, in turn, objected to Suzuki’s purchase of diesel engines from Fiat FIA.MI.

($1 = 0.8946 euros)

($1 = 121.7000 yen)

(Additional reporting by Edward Taylor and Ludwig Burger in Frankfurt and Maki Shiraki in Tokyo; Writing by William Mallard and Lisa Twaronite; Editing by Richard Borsuk/Ruth Pitchford)

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Tycoon to the rescue as cheaper China floods Vietnam’s economy


HANOI Soldier-turned-tycoon Nguyen Huu Duong is a fierce patriot still fighting to protect his country, four decades after battling American forces in the Vietnam War.

The construction mogul has amassed a war chest of tens of millions of dollars to fight for greater independence for Vietnam’s economy and counter an invasion of a different kind: Chinese goods.

Rapid growth in Vietnam is masking a chronically ill small-business sector that the rags-to-riches entrepreneur says is suffocated by a multi-billion dollar influx of cheap, mass-produced goods from China, under-cutting domestically produced items.

Duong has a rescue plan he says isn’t a swipe at China, but a nurturing of startups, enticing them with free 50-year leases in his Hanoi mall “V+” – if they sell only Vietnamese-made products.

He is lobbying the government to introduce the model nationwide to stem the closures of tens of thousands of businesses each year and encourage customers to go local.

“China exports to the world at very, very low prices and that’s put huge pressure on the Vietnamese economy and production,” Duong told Reuters.

“I’m a businessman, I understand why firms can’t develop. Without this kind of thing, Vietnamese businesses will perish.”

Vietnam’s dependence on its giant neighbor and biggest trade partner is resented by a population embittered by a history of perceived bullying and territorial incursions.

Relations soured in 2014 when Beijing started oil drilling in disputed waters, triggering the kind of nationalist rage that puts Vietnam’s rulers in a tricky spot. A strong rebuke might satisfy the public and party progressives, but could anger a neighbor capable of holding its economy hostage.

Three-quarters of their annual $60 billion trade is made up of Vietnamese imports from China and many experts consider that understated. That flow barely registers in China, worth just 0.65 percent of its $2.3 trillion in exports in 2014.

The yuan devaluation has triggered domestic fears of China flooding Vietnam with even cheaper goods, forcing its central bank to go on the defensive by devaluing its dong currency and widen its trading band twice in six days.

RESCUE MISSION

Former rickshaw driver Duong, 61, knows hard times and having prospered from his Hoa Binh brewery and construction empire, he has vowed to spend half of his fortune helping Vietnam build a small-business bedrock.

Dubbed “Duong Beer”, he says he spent $27 million on the V+ mall, which opened in February. It reduces overheads to slash prices and sells everything from handbags and shoes to nuts and ornaments. Its supermarket undercuts foreign rivals like Big C (BIGC.BK) and the first V+ shop has just opened on a Hanoi street, selling baguettes with omelettes and pate.

“Prices are good, quality is good. This must be one of the cheapest places in Southeast Asia,” said Duong.

Doan Duy Khuong, vice president of the Vietnam Chamber of Commerce and Industry, said the trade imbalance “plagued policymakers and businesses” and stifled domestic competition.

Despite Vietnamese disdain for Chinese products, their prices make them unavoidable when businesses lack capital and household budgets are modest.

Sporadic calls for boycotts fail miserably.

Dominic Mellor, an economist at the Asian Development Bank, said the V+ concept showed good intentions but the government should educate firms and nurture those in its most competitive sectors.

“There needs to be a change in mindsets and reassessment of the government’s role, with targeted business development support,” he said.

“It needs to move away from blanket subsidies towards targeted subsidies for industries and businesses able to compete and integrate into the global value chain.”

On a macro level, Vietnam’s is maneuvering to wean its economy off China, cosying up to Japan, South Korea Europe and the United States and chasing free trade accords with more than 60 markets, including a Trans-Pacific Partnership covering a third of global trade.

Duong’s mall is popular. Its first two floors are full and space being prepared on three others is booked. He says it’s just a beginning.

“Vietnamese businesses are dying, we need to do something,” he said. “We’re a nation that defeated two superpowers. I don’t want this to be a nation of laborers working for others.”

(Additional reporting by Mai Nguyen and My Pham; Editing by Robert Birsel)

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Fed’s Fischer sees inflation rebound, allowing gradual rate hikes


JACKSON HOLE, Wyo. U.S. inflation will likely rebound as pressure from the dollar fades, allowing the Federal Reserve to raise interest rates gradually, Fed Vice Chairman Stanley Fischer said on Saturday in a speech careful not to overreact to a possible Chinese slowdown.

The influential U.S. central banker was circumspect whether he would prefer to raise rates from near zero at a much-anticipated policy meeting on Sept. 16-17. But he said downward price pressure from the rising dollar, falling oil prices, and slack in the U.S. labor market is fading.

The cautious confidence from Fischer, as well as from Bank of England Governor Mark Carney who spoke at a conference alongside him, suggests at least two major central banks are poised to look beyond a week of financial-market turmoil brought on by fears that China’s economy is faltering.

“Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” Fischer told a central bankers’ conference in Jackson Hole, Wyoming.

“With inflation low, we can probably remove accommodation at a gradual pace,” he added. “Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening.”

Central banks and governments globally are bracing for the Fed decision, which could weaken foreign currencies and put even more pressure on emerging markets already reeling after the volatile global stocks selloff.

At the same time, Fischer, Carney and other policymakers are wrestling with the world’s stubbornly low levels of inflation, and recognizing that the rapid pace of globalization over the last quarter century may have made it harder for any individual country to move inflation higher.

“There are profound secular and cyclical disinflationary forces at work in the global economy,” Carney said, making it harder for central banks in London, Washington and elsewhere to reach the inflation targets they have set as a core policy goal.

The Fed has said it wants to be reasonably confident that inflation, which has been stuck below its 2-percent target for a few years, will rebound in the medium term. The pickup in prices could stall, however, if a slowdown in China and falling commodity prices drag down the global economy.

“At this moment, we are following developments in the Chinese economy and their actual and potential effects on other economies even more closely than usual,” said Fischer, a close ally of Fed Chair Janet Yellen.

The Fed’s preferred measure of inflation slipped to 1.2 percent in July, the lowest in more than four years.

Fischer said the dollar’s year-long rise played a big role in that weakness, and it could restrain U.S. gross domestic product growth through 2016 and even into 2017 – all the more reason to “proceed cautiously” in raising rates, he said.

Outside the conference on Friday, Fischer made an impromptu television appearance to say it was too early to say whether the Fed should in September hike rates for the first time in nearly a decade. Markets, on alert for any sign policymakers were ruling out a September liftoff, read Fischer’s remarks as suggesting a tightening would at least come this year.

While central banks in China, Japan, and Europe are ramping up monetary stimulus to fight off deflation or boost growth, the BoE, like the Fed, is plotting when to begin tightening policy.

Carney said a slowdown in China could depress UK inflation further but it did not, for now, change his central bank’s position on when and how it might raise rates.

Economists predict the Bank of England is likely to start raising rates in the first quarter of next year.

The developments “are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert,” Carney told the conference, reiterating that the BoE’s policy decision would become clearer “around the turn of the year.”

(Reporting by Jonathan Spicer and Howard Schneider; Additional reporting by William Schomberg in London; Editing by Andrea Ricci)

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