In The Details

Financial Articles from Hefren-Tillotson

Awaiting the Fed

Written by
August 17, 2015

The countdown has begun. Just four weeks are left until the Federal Reserve may begin raising 8.17.15interest rates in the United States. The next meeting of the Federal Reserve is on September 16th-17th. There is a distinct possibility that at the meeting the Federal Reserve will announce a modest increase (likely 0.25%) in the federal funds rate, which influences many other interest rates in the U.S.

Last week, the Federal Reserve issued a statement that indicated the economy was improving, but it was waiting to raise rates until some further improvement in the labor market and inflation was on the right track. Now the question becomes what does some improvement mean? No one, outside the Fed itself, knows for sure.

Accordingly, economists and market participants are carefully scrutinizing all the new data that comes out about the economy and especially the labor markets. Each bit of positive news increases the likelihood of a rate increase and any negative news lowers the chances.

While the unemployment rate is getting close to the low levels seen before the financial crisis, other data could persuade the Fed further improvements are needed. With the interest rates in this country affecting economies all over the world, this decision by the Fed will have global consequences, creating much global anticipation.