Economics
One Volatile Week Could Seal Fed Stance After Years of Low Rates
- Fed now watching markets after China shocks sparked turbulence
- Price swings in currencies, bonds and stocks have soared
Fed Signals: Too Much Information for Wall Street?
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Call it the tail wagging the dog. After holding interest rates at rock-bottom levels since 2008 to support the U.S. economy, the Federal Reserve’s decision whether to raise them this month may boil down to what happens in financial markets during the next five trading days.
Volatility in currencies, bonds and stocks has soared to multi-month highs in recent weeks, threatening the central bank’s well-telegraphed script for tightening monetary policy for the first time since 2006. While policy makers have already seen most of the key economic data that’ll be available by the time they meet next week, the surge in market volatility means a decision to raise rates may go down to the wire.