Summary Dollar gained pace Monday ahead of a policy meeting of the Federal Reserve.
NEW YORK (AFP) - The dollar gained pace Monday ahead of a policy meeting of the Federal Reserve, though held back somewhat by a disappointing report on US industrial production in August.
The Fed opens a two-day meeting on monetary policy in Washington Tuesday amid heightened discussion over whether it should move sooner to hike interest rates.
Critics of its nearly six-year-old zero rate policy say it is feeding asset bubbles and possibly inflation.
The Bank for International Settlements warned Sunday that loose monetary policies have created an "illusion of permanent liquidity" that is spurring investors to make risky bets and push up asset prices.
"Markets will not be liquid when that liquidity is needed most," said Claudio Borio, who heads the BIS s monetary and economic unit.
He urged "sound prudential policies (and) extra prudence on the part of market participants themselves."
US interest rates have edged up in recent weeks amid the calls for tighter policy, but still remain far below the levels of last December.
Slow growth in Europe, fresh data from China indicating a deceleration, and the 0.1 percent fall in industrial output in the US last month could support dovish central bankers arguments for keeping rates down longer.
Most eyes are watching to see if the Fed tweaks its message in a way that would allow for a rate hike before the mid-2015 forecast without actually moving that target. The ambiguity could give a boost to the dollar, said Kathy Lien of BK Asset Management.
The pound meanwhile was flat against the euro and slightly lower on the dollar ahead of Thursday s referendum on Scottish independence, which could be close though the "no" vote is expected to win.
