There is a growing acceptance among Federal Reserve officials and the public that the central bank won’t raise interest rates this year. So what happens next?
Mohamed El-Erian, chief economic adviser at Allianz SE, ponders this question in an article in Bloomberg View. He attribute’s the Fed’s decision to delay raising interest rates to a fragile global economy and weakening conditions in the U.S., “but those who now predict the Fed will put off its first increase in almost 10 years until March 2016 may be misreading the broader domestic and international context,” he adds.
El-Erian argues that it is premature to entirely rule out that the Fed might increase rates in December. “Only a lot more signs of weakness in the domestic economy, as well as a return of global financial market instability, would make [an increase in March 2016] a sure bet.”