Interest rate decision by the Fed
Tomorrow, Thursday 17 September 2015, the federal Open Market Committee (FOMC) of the US central bank Fed will be taking an important decision. Is the Fed funds rate to be raised or not? The financial markets have accorded this decision a particularly important role. After all, the rate hike by the most important central bank in the world could cause the degree of instability on the financial market to continue rising.
Regardless of whether or not a rate hike materialises, the Fed will communicate that the interest rate cycle will only be set off very gradually. At the same time, the projection for the final level of the cycle will probably be taken down a bit. If the Fed managed to alleviate the worries of excessive rate hikes, a slight increase of the Fed funds rate on coming Thursday would not upset the financial markets in any sustainable fashion. However, the weakest segments in the emerging countries would come under pressure.