Fed Rate Hike Window Getting Smaller

The window to raise rates hasn’t been slammed shut—it has yet to creak open.

The panicky selloff in global markets prompted a chorus of observers to bemoan that the Federal Reserve has now missed its chance to raise interest rates.

But financial conditions are just one aspect of the broader economy. This selloff, steep as it’s been, is only significant if it begets a global recession or otherwise trips up America’s ongoing expansion.

Really, the U.S. has been crawling toward the precipice, finally, of full recovery and higher interest rates.

The biggest risk to that outcome, paradoxically, would be for the Fed to hike rates prematurely. Their window was not “open” to do so last year just because commodity prices hadn’t yet fully collapsed and China hadn’t yet stumbled.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza