Fed Stuck Between China and Rate Hike

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.

via CNN

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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