American analysts expect that the Federal Reserve will not increase interest rates during its next meeting in September. The past meeting of the Federal Reserve, held last month, had witnessed the agreement of 9 out of 10 members on the necessity of increasing interest rates.
Different Viewpoints
“The most important point was that there was a disagreement concerning the date of increasing interest rates,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at Brookings Institute.
“They also didn’t have any consensus about what to do; some of them are very patient and they don’t want to move too soon,” he added. Ryan Sweet, director at Moody’s Analytics, said “the Federal Reserve is being coy about when to raise interest rates.”
“They are not showing their cards. I think the Fed wants be more confident that inflation is moving back to their two per cent target before they raise the rates again,” he explained. Sweet also noted that the next rate hike is dependent on the incoming macroeconomic data. The U.S. economy added 255,000 jobs in July, while the average job gains in the last three months increased to 190,000 with the revisions. However, July figures for retail sales and consumer price index did not change much compared to the previous month. This does not give many positive signs to the Fed for the well-being of the overall economic outlook.
“The economy is clearly improving. Not all the numbers point in the same direction but basically things look okay-to-better,” Wessel said. “The fact that inflation remains below target and the recent consumer price numbers were so modest will give the people at the Fed to wait a little longer,” he added.
