Dow Drops 300
Fed Explains Lack of Rate HikeJanet Yellin made comments today that helped to explain why the Fed didn’t raise rates this month. "Heightened concerns about growth in China and other emerging market economies have led to notable volatility in financial markets," Yellen said.
That’s not a bad thing when it comes to the American economy. A rte raise is a de facto inflationary move, and the world economy just can’t deal with inflation in the US dollar right now. The fact is that, when a lot of foreign economies go bad, they invest in the US dollar through bonds. Raising bond rates looks good on paper, but it is an inflationary move when multiple foreign countries hold our debt.
Of course, taking all of this into consideration complicated the job of the Fed much more than it has to be. Technically, all the Fed cares about is the interest rates that it adjusts between domestic US banks. The fact that it’s taking the rest of the world into consideration at all has some analysts claiming that the Fed is overstepping.
Whether or not that’s true, the next point that the Fed will meet to discuss a rate taise will be in December. A lot of analysts are predicting a 0.25% raise in the prime rate from the Fed at that point. They could also hold off until March of next year.
Moody’s Downgrades FranceIn a move that could continue to shake an already shaken Euro, Moody’s has downgraded the French economy from AA-1 to AA-2. The move comes on the heels of an in-depth review of French finances and growing doubts over how well the country will continue to fare as Europe continues to struggle.
The move comes at an awkward time for France, as the rest of Europe is dealing with a refugee crisis. There’s no telling what sort of impact that could have on France as a whole, and their take on the refugee crisis.
Published on Sep 18, 2015By Aaron Phillips