18 September, AtoZForex.com, Vilnius – As the Federal Reserve held-off from hike interest rates on Thursday, it would seem the next plausible date will be December. However, according to a former New York Fed executive vice president Dino Kos, even December is uncertain. Hence, he advises to prepare for a long hike wait.
The US economy has been in a recovery for six long years. However, even now the Fed find reasons to hold. The committee sounded dovish at September 17 meeting, downgrading the economic projections and providing the same mundane clues for a lift-off date.
Growth projections got pared back to 2.3% for next year. The Fed pegged inflation at 1.7% in 2016, still under the 2% aim, even as the unemployment rate is foreseen at 4.8%.
One of the key takeaways from the meeting is the Fed is deeply concerned about the global developments, especially China and Oil. May it be not for the US economy, a rate hike could screw world’s economy into recession, as everyone searches for way to easy the policy.
In such backdrop, nothing is going to change over month nor over three. By the time China will shift to service and consumption and oil prices get back to more sustained higher-end range, we will be deep into 2016.
“I don’t see how enough changes for them to move by December, so we’re in 2016 looking at the same factors,” Kos, head of regulatory affairs at CLS Bank International said.
The bottom line, the Fed will remain dovish seeing economic improvements, however, the improvement will need to be seen at economies around the globe.
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