Fed official plays down US rate rise expectations

A senior US Federal Reserve official has played down expectations it will raise interest rates next month amid concerns about the impact turmoil in China could have on global markets, the FT reports.

The Chinese economy has been battered in recent months, with the Shanghai Composite index losing nearly 40 per cent of its value since its peak in June.

In response, the People’s Bank of China has cut its main interest rate by 0.25 percentage points to 4.6 per cent in an attempt to boost the economy.

William Dudley, head of the New York branch of the Fed, told a conference it is “important not to overreact to short-term market developments”.

However, he also said the case for tightening monetary policy next month is “less compelling to me than it was a few weeks ago”.

He added: “International developments have increased the downside risk to US economic growth somewhat.”