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Fed's Fischer: 'haven't made decision yet' on rate rise

Federal Reserve Vice Chair Stanley Fischer said Friday that the door remains open for the Fed to lift interest rates next month, after a week of China-sparked global markets turmoil. Fischer said no decision had been made ahead of the US central bank's September 16-17 meeting, with policy makers still watching to see how deep the fallout is from China's downturn. Fischer told CNBC television in an interview that while the US economy remains strong, it was "too early to tell" whether the markets turmoil sparked by China has lessened the argument for a long-expected increase in the federal funds rate. "We haven't made a decision yet, and I don't think we should make a decision" before the meeting, he said. "The change in the circumstances which began with the Chinese devaluation is relatively new and we are still watching how it unfolds. So I wouldn't want to go ahead and decide right now." "We are dealing with something which happened about 10 days ago, particularly the change in the circumstances. We've got a little over two weeks before we make the decision and we've got time to wait and see the incoming data and see what exactly, what is going on now in the economy." - Fed anxious to move - Speaking on the sidelines of the Fed-hosted international central banking symposium in Jackson Hole, Wyoming, Fischer said the Fed is still heading in the direction of undertaking the first rate increase in nine years, after holding the fed funds rate near zero since the 2008 economic crisis. But the Fed needs to get more information on how the labor market is strengthening and will be paying attention to the August jobs report coming out next week. Up to now, he noted, the data "has been impressive, and the economy is returning to normal." However, he added, "We are not certain we're there yet." The question, he said, is how China's slowdown hits other countries in Asia and elsewhere, and understanding the impact of the immediate market turmoil. "If you don't understand the market volatility, and I'm sure we don't fully understand it now... it does affect the timing of a decision you might want to make." Earlier this week the head of the Fed's New York branch, William Dudley, that the argument for a rate rise in September had diminished with the concerns about China. While US economic data has been mostly strong, Dudley, a close policy ally of Fischer and Fed Chair Janet Yellen, stressed that the key to the decision is the view ahead. Another Fed regional chief, Dennis Lockhart of the Atlanta branch, echoed Fischer's comments, saying the US economy is strong and the Fed is "anxious" to normalize policy. However, he told Bloomberg television, "the risk factor has arisen that perhaps did not exist at the beginning of the month. I think it has to be considered an open question whether we move now or we wait a little while." But markets took Fischer's and Lockhart's comments as relatively bullish. The dollar jumped 0.6 percent against the euro before slipping back to a more modest gain at $1.1185, and the yield on the 10-year Treasury surged from 2.13 percent to 2.18 percent. Wall Street stocks were meanwhile little-changed, the S&P 500 finishing up a bare 0.06 percent.