The Fed interest rate rise

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A long-awaited meeting of the US Federal Reserve did not result in an interest rate rise.

Thursday 17 September had been much anticipated. The Federal Reserve Open Market Committee (FOMC) was set to release its meeting statement, revealing its latest interest rate decision. Ahead of the announcement there had been much speculation that an interest rate ‘lift-off’ would happen. Janet Yellen, the head of the Federal Reserve, had hinted as much.

The announcement was something of an anti-climax; the decision was to keep rates on hold. At first sight this would appear to be good news, however, not everyone agreed. Thirteen of the seventeen members of the Federal Reserve Board (Fed) still thought 2015 was the year in which to start raising interest rates. The statement from the FOMC said:

Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.

This prompted a familiar market worry: what does the Fed know that we don’t?

The next Fed meeting is in late October, but there is no scheduled press conference afterwards. The final meeting of the year on 15-16 December, complete with press conference, is now being penciled in as when the decision to increase rates will be taken. In the interim, we can expect more market gyrations as the experts attempt to second guess Ms Yellen and company.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

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