Glacial Fed

So in the end, the US Federal Reserve decided to take a pass and keep short-term rates unchanged.

Stunner? Not really. I thought the chances of a rate hike at its Sept. 20-21 policy meeting were next to nil.

The night before, the Bank of Japan pretty much did the same thing by not changing its policy of buying bonds to keep short-term rates negative.


BOJ Caution

Instead, the Japanese central bank, which adopted negative interest rates in January, announced plans to keep the long end of the yield curve closer to zero by targeting 10-year bonds.

That came as a disappointment to some investors and economists hoping for more dramatic action.

Since the next Federal Reserve Board meeting is just days before the 2016 US general election, the chances of a rate move are low, in my opinion.


In my view, the next potential window for a rate hike is December.

And that’s not even a sure thing, since the Fed has just lowered its long-term US economic growth estimates.

Stay tuned.

Photo Credit: Day Donaldson via Flickr Creative Commons