Fed Succumbs to Recent Market Turbulence and Keeps Rates at Zero

September 17, 2015

Fed Succumbs to Recent Market Turbulence and Keeps Rates at Zero Photo

The Fed delivered another "goose egg" to investors as recent market turmoil and global economic weakness trumped improving economic conditions in the United States. Subdued measures of inflation (as well as lower expectations for future inflation) also weighed heavily in the Federal Open Market Committee (FOMC) decision.

I expected the Fed to increase rates today while guiding lower the future path of projected tightenings to calm fears among both equity and fixed income investors. Instead, the Federal Reserve will continue to be in the spotlight for the remainder of the year as investors try to assess the likelihood of a rate move occurring in the 4th quarter.

The interest rate and risk markets will certainly welcome this news as it appears the Fed Chair Yellen may help sustain her two predecessors' legacies with the emergence of the "Yellen Put."

Tags: Viewpoints | U.S. economy | Federal Reserve | Interest Rate | Janet Yellen | Fed tightening | Market turbulence

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