The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Financial markets have all but shut the door to a Federal Reserve rate hike in September, following a rout in stocks, currencies and commodities this past week, but economy watchers are only now warming up to the idea -- in public at least.
from Morning Bid with David Gaffen:
The July meeting was never meant to be much of a thing with the Federal Reserve, and that’s exactly how it’s worked out. The Fed seems like it is still targeting a modest increase in rates in September, with – as many strategists have already noted – the real action to come later on down the road, as Janet Yellen and others have argued that the first move isn’t the one to really worry about.
A U.S. Federal Reserve interest rate hike in September is almost certain according to many forecasters and investors, but the decision to tighten policy for the first time in nearly a decade is not as clear-cut as it may appear.
The U.S. and British central banks are scrambling to be the first of the majors to raise interest rates after a long period of unprecedented monetary generosity. It won't happen immediately but both Janet Yellen, who chairs the U.S. Federal Reserve, and Bank of England Governor Mark Carney say there will be a hike this year (Yellen) or around the end of the year (Carney). Might this be a bit of a rush? Not everything in the world economy is as sanguine as the U.S. and British economies purport to be.