Global Risks Restraining The Fed From Hiking Rates
US Fed officials seemed ready to raise fed fund rates in September, but held off because of China’s economic slowdown and its potential to halt US growth and inflation., and push the anemic economy into recession.
Hence, cheap money continues to flow into Wall Street and fuel the financial markets, as it did again Thursday.
DJIA +138.46 at 17050.75, NAS 100 +19.64 at 4810.79, S&P 500 +17.60 at 2013.43
- NAS 100+1.6% YTD
- S&P 500 -2.2% YTD
- DJIA -4.3% YTD
- Russell 2000 -3.4% YTD
Minutes from the 16-17 September meeting showed the central bank believed the time for the 1st Fed rate increase in 9 years “might be near.” The control word here is “might.”
Policymakers decided that it would be “prudent to wait” for evidence that the economy had not deteriorated and that inflation would gradually move back toward the Fed’s 2% annual target.
Some FOMC members also expressed concerns that a premature rate hike could harm the central bank’s credibility. “Could”, read: Has
The September meet was preceded by weeks of media and pundit speculation over whether rates would be increased.
Fed Chairwoman Janet Yellen told reporters at a news conference following the meeting that a rate hike was still likely this year, a prediction she repeated two weeks ago during a speech in Massachusetts. As she continues to “Jawbone” the markets fueling uncertainty and volatility..
The Fed’s 2 last meetings of this year are on 27-28 October, and 15-16 December..
The Fed has kept its benchmark fed funds rate at Zero+ since December 2008. It has not raised rates since June 2006.
There may be trouble ahead.