U.S.: Fragile Markets Are Tying The Fed's Hands

But a strong job report raises questions about holding rates steady

Suddenly, policy choices at the Federal Reserve are getting a lot tougher. Thanks to the October job data, the Fed is faced with mounting evidence that a rapidly growing economy is pushing labor markets beyond their noninflationary limit, and that some inflation insurance for 1998 might be warranted. However, the Fed knows that an interest-rate hike amid shaky global financial markets would risk further calamity, both abroad and at home, as Wall Street worries that Asia's problems will fall back on U.S. companies.

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