The U.S. Federal Reserve is stuck between a rock and a hard place.
A September Fed interest rate hike seemed almost certain until a couple of weeks ago. It was slated to be be the first rate hike in almost a decade and a healthy sign of how much the U.S. economy has recovered since the recession.
But the plunge in global stock markets, triggered by China’s economic slowdown, is now raising doubts about a September rate hike.
“This pretty dramatically reduces the likelihood the Fed will raise rates in September. That means the Fed is kind of trapped by all this turmoil,” says Ed Yardeni, chief investment strategist at Yardeni Research.