THE US Federal Reserve’s decision next week on whether to raise interest rates is a vital issue for markets and investors around the world. Problem is, all the speeches, forecasts, meeting minutes, press conferences and media interviews given by Fed officials in the lead up is muddying, not clarifying, the outlook.
Case in point: Boston Fed President Eric Rosengren on Sept 9 said the economy could overheat if they waited too long to raise interest rates, contributing to a 2.5% rout in the S&P 500 Index that was the biggest move since the UK’s vote to leave the European Union. Three days later, Fed Governor Lael Brainard argued there’s no rush to tighten, helping lift the S&P 500 by 1.5% in the equity benchmark’s biggest one-day reversal since January.
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