17 September, AtoZForex.com, Lagos – With the rate hike decision just a few hours away, the markets have been quite on hold with the USD trading mixed against its major counterparts. There is ample argument both for and against rate increase.
Hopes of a September rate hikes have been subdued by recent volatility in global markets and signs of weakness in China’s economy. On the other hand, stronger labor market supports the case for a move and some economists and analysts argue that a rate rise now will remove a layer of uncertainty hanging over global markets.
No doubt, any move by the Fed now will affect economies around the world. Like the Bank of England, who is seen to be waiting on the Fed decision before deciding on when to raise its own rate. A host of central bankers around the world have aired their views on the prospect and time for rate hikes:
Haruhiko Kuroda, Bank of Japan Governor:
“When the Federal Reserve raises interest rates that means the U.S. economic recovery is quite robust,” he told CNBC.
“You might think that U.S. monetary policy normalization could adversely affect emerging economies, but I don’t think so.”
Agustin Carstens, Bank of Mexico Governor:
“If the Fed tightens, it will be due to the fact that they have a perception that inflation is drifting up, but more importantly that unemployment is falling and the economy is recovering,” Carstens told Reuters on the sidelines of last month’s economic symposium in Jackson Hole, Wyoming.
Elvira Nabiullina, Central Bank of Russia Governor:
“There are two scenarios possible that raising interest rates will have, bearing in mind that market players are expecting this particular event and in many ways have priced it into the valuation of their assets. And in this (first) case there are not going to be any dramatic changes in the market environment,” she told CNBC.
“But the second probability is also possible – that markets may respond in a very nervous way and then generally speaking, increase global turbulence that may affect the Russian economy as well.”
Guy Debelle, Reserve Bank of Australia Assistant Governor (Financial Markets)
“This is the most well telegraphed rate rise in the history of rate hikes. If you’re not ready for it, you sure as hell have been warned.”
Think we missed something? Let us know down in the comments section.