All eyes on Federal Reserve ahead of Thursday’s decision on interest rates

Now, the answer looks like it could be “yes”.


In recent trading, the yield on the benchmark 10-year Treasury note was 2.169%, compared with 2.183% Friday, according to Tradeweb. It has fallen after hitting this year’s peak of 2.5% in June. But <strong>the Fedstrong> deputy chairman, Stanley Fisher, said two weeks ago he still saw a “pretty strong case” for raising rates.

Elsewhere on the economic calendar, a week of heavy reporting kicks off Tuesday with August retail sales, New York region manufacturing and August industrial production data.

“Construction activity has levelled off but remains high”. Growth was below forecasts and analysts said even the level reported was due to comparison with an unusually weak period a year earlier.

The issue before the Fed is whether to bring the benchmark federal funds rate up from zero percent, where it has been frozen since the financial crisis of 2008. The results, released this week, showed that 62 percent of respondents support keeping interest rates low.

Federal Reserve wants inflation to be high, but not higher than a set target. “But to us, it’s not a question of “if the Fed raises rates but when”.

Although the movement was alongside the rest of the markets, investors of financial stocks have more to worry about that just the temporary pullback. And we are aware that this has to come at some time.

Focus was also firmly on China which revealed a mixed bag of economic data from the world’s second biggest economy. It has been building up its defences against any global volatility once the U.S. increases interest rates.

But the shockwaves from the crash of Chinese stock markets and Beijing’s devaluation of the yuan last month have injected a new factor. It eventually triggered a major stock market rout that has since been dubbed “Black Monday”.

At the same time, Mazza warns that investments such as utility stocks and consumer staples may fall out of favor.

Factory output rose 6.1 per cent last month from a year earlier, less than the 6.4 per cent expected but up from July’s six per cent.

Amid all this drama, the Fed remained ambiguous on whether it would raise interest rates or not.

“The uncertainty about when the Fed hike will happen is causing more damage than the Fed hike itself will”, he said.

Tightening at this point “would be a serious policy error”, he said.

The Fed may raise rates by a tiny amount next week, and slightly further at its meetings next month and in December. Fed officials have acknowledged they will consider the recent market turbulence and the outlook for the global economy when making their decision.

While the Fed hike debate goes on, markets will probably stay volatile and rupee is expected to maintain a weakening bias in the short term, it said.

The steel sector is facing problems because of a surge in imports, but the downstream industries like automobile, machine goods makers and power equipment manufacturer, are getting it at a cheaper price, Das said. “It can not surprise anyone”.

“There are several reasons to expect the Fed to be cautious and gradual”.

On the plus side, there is some relatively robust domestic economic data.

“It’s really Fed watch”.


He was replying to a query on whether the government is prepared to deal with the challenges posed by a possible interest rate hike by the United States on September 17.

US Dollar May Find This Week's FOMC Meeting Disappointing