25 Aug 2015
Fed rate hike projections pushed back to early 2016 - Barclays
FXStreet (Mumbai) - Economists at Barclays Capital have pushed back their rate hike projections from September to March in the wake of recent financial volatility and uncertainty surrounding growth in emerging markets.
Key Quotes:
"Although we continue to see economic activity in the U.S. as solid and justifying modest rate hikes, we believe the Federal Reserve is unlikely to begin a hiking cycle in this environment for fear that such a move may further destabilize markets."
"Instead, we believe the FOMC will delay the start of the rate hike cycle beyond September as a means to offset tighter financial conditions while it evaluates the effect of recent volatility."
However, it also added that if current "market volatility prove transitory," the FOMC could increase its borrowing costs at a December meeting.
Key Quotes:
"Although we continue to see economic activity in the U.S. as solid and justifying modest rate hikes, we believe the Federal Reserve is unlikely to begin a hiking cycle in this environment for fear that such a move may further destabilize markets."
"Instead, we believe the FOMC will delay the start of the rate hike cycle beyond September as a means to offset tighter financial conditions while it evaluates the effect of recent volatility."
However, it also added that if current "market volatility prove transitory," the FOMC could increase its borrowing costs at a December meeting.