The Fed did not raise interest rates - September 18, 2015

The Fed did not raise interest rates

As Innovative Securities predicted, the Fed did not hike the interest rates. The main reason for the delay was the low inflation. In our market analysis a week ago we also pointed out the importance of inflation in the decision making. There were some other reasons we believed would the delay of the hike.

The US economy is improving but showing a very mixed picture, and as Janet Yellen expressed some concerns about inflation, namely that it would continue to run below its 2% objective in medium term. The strong US dollar puts pressure on the US manufacturing sector too. The financial stability is also an important part of Fed’s policy, and this time only 30-35% of the market believed that a raise is in due time.

The hike may be delayed now, but there is a good chance that a raise will come in December or the beginning of the next year.