global markets wait nervously for feds rate decision
Last Updated : GMT 12:34:34
Arab Today, arab today
Arab Today, arab today

Uncommon debate raged over quarter-point increase

Global markets wait nervously for Fed's rate decision

Arab Today, arab today

Arab Today, arab today Global markets wait nervously for Fed's rate decision

Turmoil in global financial markets for August has not eased
Washington - Arab Today

Financial markets that have been buffeted by the prospect of the first US interest rate hike in almost a decade are buckling up as the Federal Reserve begins meeting Wednesday to weigh its decision.

An uncommon debate has raged over whether the US central bank should go ahead with a quarter-point increase to the federal funds rate that would nevertheless mark a crucial break with the Fed's crisis stance since 2008.

By most assessments the US economy, with unemployment at 5.1 percent and moderate growth, is strong enough now that holding the rate at zero percent is no longer warranted.

The initial increase would likely begin a series of increases toward more "normal" levels around 3.0 percent over the next couple of years.

But to many economists, the slowdown of global economic activity, particularly in China, now poses a risk to US growth and an interest rate hike could set the economy back.

And many others say it could cause new problems in nervous global markets at just the wrong time.

The World Bank warned in a report Tuesday of a "perfect storm" of dangers, including a freeze in capital flows, for developing countries as the Fed tightens monetary policy.

"Given the substantial risks involved, they would do well to buckle their seatbelts in case the ride gets bumpy," said Carlos Arteta, lead economist in the Bank's Development Prospects Group.

The policy-setting Federal Open Market Committee, led by Fed Chair Janet Yellen, will meet on the issue Wednesday and Thursday, announcing their decision at 1800 GMT Thursday.

Then Yellen will undertake the delicate challenge of explaining the decision in a press conference, with whatever she says as crucial to markets as the decision itself.

- Risks from China -

The Fed has been signalling the coming rate rise since 2013 and Yellen has repeatedly said in recent months that it would probably come by year-end.

But the depth of China's problems -- underscored by the August 11 devaluation of the yuan and the plunge in Chinese stocks -- introduced new risks not only to other emerging economies but also, potentially, to the United States.

"The change in the circumstances which began with the Chinese devaluation is relatively new and we are still watching how it unfolds," Fed Deputy Chair Stanley Fischer said at the end of August.

Last week Andrew Levin, a Dartmouth economics professor who worked at the Fed for 20 years, argued that the US economy still harbors weaknesses that undermine the argument to increase interest rates.

Tightening policy at this point "would be a serious policy error," he said.

On the other hand, tired by all the talk while interest rates have already jumped and their currencies have fallen, some of the world's biggest emerging economies are pleading to end their agony and take the big step.

"It's preferable to have a move early on and advertised, a slow move up rather than the Fed be forced to tighten more significantly down the line," Indian central bank governor Raghuram Rajan said last month.

Even if the FOMC demurs this week, Yellen's forecast could still hold: they have two more meetings left in 2015, one at the end of October and one in mid-December.

Charles Collyns, chief economist at the Institute of International Finance, said that market volatility will persist in any case, because the US and British economies and central banks are moving in the opposite direction of much of the rest of the world.

"This divergence, together with growing divergence in economic growth between mature and emerging markets, will generate market uncertainty and volatility in the period ahead whatever the Fed decides on Thursday," Collyns said.
Source: AFP

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

global markets wait nervously for feds rate decision global markets wait nervously for feds rate decision

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

global markets wait nervously for feds rate decision global markets wait nervously for feds rate decision

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Prince's vision spurs new Cornwall village

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Airbnb raided by Japan

GMT 01:55 2017 Saturday ,18 November

Airbnb raided by Japan
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Hanan Metawe denies apology for “Major Treason”

GMT 12:22 2017 Thursday ,16 November

Hanan Metawe denies apology for “Major Treason”
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 06:13 2017 Friday ,17 November

Pope denounces healthcare inequality

GMT 05:18 2017 Thursday ,16 November

Boeing announces $27bn from flydubai

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday