Arab Today, arab today world on edge as fed weighs rate increase
Last Updated : GMT 00:26:33
Arab Today, arab today
Arab Today, arab today

World on edge as Fed weighs rate increase

Arab Today, arab today

Arab Today, arab today World on edge as Fed weighs rate increase

The turmoil in global financial markets
Washington - AFP

The possibility that the Federal Reserve could raise interest rates for the first time in over nine years this week has injected new levels of anxiety in the global economy.

With markets still in turmoil from China's downturn and sensitive to any added uncertainty, calls from economists for the Fed to hold off are being countered by pushes from emerging economy officials to get the long-awaited move over with.

The fierce debate underscores the complexity of the challenge facing US central bankers when they meet on Wednesday and Thursday.

The issue is whether to pull the benchmark federal funds rate up from zero percent, where it has been frozen since the financial crisis of 2008.

The Fed itself is anxious to get off that extraordinarily low level, and US economic growth is strong enough to handle a quarter-point rate increase, a number of Fed officials have suggested.

But the turmoil in global financial markets for the past month has not eased, and there is still much to be known about how China's problems will affect the rest of the world.
A Fed rate increase threatens to raise the borrowing costs of many governments and companies -- though analysts point out that that has already happened in anticipation.

Both the World Bank and the International Monetary Fund, worried about slowing global growth, have suggested the Fed can stand pat.

But others say it is time to pull away from seven years of extremely easy-money policies.

"We are at historically low rates right now, we've got to have a return to normal," argued Robert Morgan of the American Bankers Association.

- Long-expected rate hike -

For months the policy-setting Federal Open Market Committee under Fed Chair Janet Yellen has been eyeing the September 16-17 meeting for a rate increase.

The move would signal the Fed is ready to "normalize" monetary policy with a slow series of increases over the coming two years.
FOMC members base their decisions primarily on the jobs market and inflation. The former has been strong, the unemployment rate falling to 5.1 percent in August, the lowest since April 2008.

Inflation, which the Fed wants to see climb to around 2.0 percent as a sign of steady economic growth, has sagged.

The main reason has been the drop in the prices of oil and other commodities, rather than weak US growth. But the slowdown in China and other emerging economies, and the strong dollar, continue to pull prices lower.

Last month Yellen's top deputy, Stanley Fischer, said the Fed will not wait for inflation to hit 2.0 percent before raising rates. The deflationary pressures were likely to be short-lived, he argued.

But the shockwaves from the crash of Chinese stock markets and Beijing's devaluation of the yuan last month have injected a new factor.

"China's stock market crumble and the subsequent reactions throughout the rest of the world have confirmed that the US remains susceptible to external shocks," said Kim Chase at BBVA.

However, she added, "The benefit of increasing in September is that it sends a signal to the world that the Fed is confident in the direction the US economy is heading."

Yet Andrew Levin, a Dartmouth economics professor who worked at the Fed for 20 years, said even the unemployment data still does not support an increase.

He said there remains ample evidence of labor market slack, including the 2.5 million American who have given up looking for work and the large number of people forced to accept part-time jobs.

Tightening at this point "would be a serious policy error," he said in an analysis of Fed choices.

In comments made in recent weeks, Fed officials themselves appeared divided, suggesting that Yellen could have trouble reaching a consensus.

"Each member is coming into the meeting with a different opinion, and it is unlikely that we will see a unanimous decision either way," said BBVA's Chase.

 

 

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*

Arab Today, arab today world on edge as fed weighs rate increase Arab Today, arab today world on edge as fed weighs rate increase

 



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*

Arab Today, arab today world on edge as fed weighs rate increase Arab Today, arab today world on edge as fed weighs rate increase

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Egypt tourism revival steady but slow

GMT 16:04 2017 Tuesday ,19 September

Egypt tourism revival steady but slow
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today 600,000 children may flee to Bangladesh

GMT 06:49 2017 Monday ,18 September

600,000 children may flee to Bangladesh
Arab Today, arab today Equifax executives step down

GMT 16:16 2017 Saturday ,16 September

Equifax executives step down
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today New Zealand opposition looks

GMT 10:35 2017 Thursday ,14 September

New Zealand opposition looks
Arab Today, arab today 5,000 'Dieselgate' deaths in Europe per year

GMT 19:18 2017 Monday ,18 September

5,000 'Dieselgate' deaths in Europe per year
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 Five trends at the Frankfurt auto show

GMT 12:04 2017 Monday ,18 September

Five trends at the Frankfurt auto show
Arab Today, arab today Renault-Nissan to launch

GMT 10:44 2017 Saturday ,16 September

Renault-Nissan to launch
Arab Today, arab today Eman Al Assy receives three offers

GMT 06:31 2017 Saturday ,16 September

Eman Al Assy receives three offers
Arab Today, arab today 'Severe' Typhoon Doksuri pounds Vietnam

GMT 15:49 2017 Friday ,15 September

'Severe' Typhoon Doksuri pounds Vietnam

GMT 11:10 2017 Friday ,15 September

Fadl Shaker retreats from surrendering himself

GMT 05:05 2017 Tuesday ,12 September

Pregnant woman's suicide roils China

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 10:25 2017 Thursday ,14 September

Greece fumbled oil spill response

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 04:45 2017 Sunday ,17 September

France's hurricane-hit St Martin

GMT 21:57 2017 Sunday ,17 September

Russia and Iraq restore air travel

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:56 2017 Friday ,15 September

Apple's grand plan in Ireland held up by a forest

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
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