Fed official: China a big factor in interest rate decision

In the us , interest rates have never been lower for longer (for almost seven years) but delay in raising rates also carries increasing risk.

He said keeping interest rates at their current level deviated from the way the Fed has responded to the economy in the past, which was unsafe because public understanding of the Fed’s behavior was “an essential foundation for the monetary stability we now enjoy”.

Mike van Dulken, head of research at Accendo Markets, said investors are feeling uneasy after the Fed highlighted “concerns about external factors such as China, market volatility and deflation derailing a [U.S.] recovery”. Even though the Fed is optimistic about the USA economy, she cited the global economic slowdown and volatile stock markets as reasons to wait on the first rate hike in nearly a decade.

Verizon slumped 95 cent, or 2 percent, to $45.26 after the communications company said its earnings may be flat this upcoming year.

The Federal Reserve may have missed its last, best chance to raise interest rates this year.

Fed Chair Janet Yellen seemed anxious last week about the weakening global economic outlook, saying: “The situation overseas bears close watching”. “For that reason you might want to try to look through the low prices of oil today, and instead be looking to a measure like the Dallas Fed trimmed measure mean inflation rate, which is running at 1.6%”. On Thursday, just at the moment the Federal Open Market Committee announced it had chose to leave rates unchanged, the yield on the 30-year bond was 3.09% – a full 86 basis points, or 38%, higher than it was at the January low.

“As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment”, Mr Lockhart said in a speech in Atlanta. “It does not care about how Fed policy might affect emerging markets”, he said.

Investors reacted to the cautious tone by pushing bets of a rate hike into 2016, with a Fed meeting in January given a near 50 percent probability, according to futures markets.

S&P 500 down 1.61 percent to 1,958.08 and Nasdaq Composite dropped 1.36 percent to 4,827.23.

GoPro was down 4.2 percent at $33.66 after Barron’s said the video camera maker’s shares could plunge to $25 as its latest product launch underwhelmed customers amid increasing competition.

Although not a voting member on the FOMC, Bullard noted that he “would have dissented on this decision”.