US inflation determines now timing of first rate hike

U.S. import prices declined in September for the third consecutive month as cost of oil declined 2% in the reported month and a strong local currency makes imported goods less expensive for Americans. The Labor Department said import prices dropped 0.5% last month. Falling import prices are one of the factors, which are keeping U.S. inflation considerably below the Fed's target of 2%. Thus, the policy makers are looking for new tactics to trigger price increases to their goal as slowing global economic growth, falling commodity prices and flat wages add to concerns that inflation is approaching the danger zone. The inflation rate has been falling short of its 2% goal for 28 months in a row. As long-term inflation expectations are dropping in financial markets, the FOMC is moving its attention towards prices after its main focus on unemployment rate for months. With cost of living rate at 1.5%, the FOMC policy makers are not likely to hike interest rates, even if the U.S. economy reaches full employment, defines as jobless rate of 5.2% to 5.5%, according to former Fed Governor Laurence Meyer. Jobless rate was 5.9% last month.  A number of officials have recently highlighted that below-target inflation is a threat that weighs against lifting interest rates too soon. Charles Plosser, Philadelphia Fed President, said that Congress should remove unemployment from the Fed's mandate, so that the central bank could focus solely on inflation.