The main reason why the Federal Reserve (and other central banks) wants to raise interest rates is to provide them with a tool to stimulate the economy when the next recessionary cycle starts. The idea is that by lowering interest rates the economy gets a monetary boost because borrowing costs are lower; conversely, when inflation rears its ugly head, raising interest rates makes borrowing dearer and so acts to cool the economy, reducing inflationary pressure. Of course, if interest rates are close to rock bottom, a central bank has no (traditional) means to stimulate the economy, so the Fed is keen to see the “normalisation” of interest rates. The fact that interest rates are still close to record low levels for many central banks underlines the gravity of the Global Financial Crisis and shows that the global economy has yet to fully recover from the hit it caused.
The Federal Reserve has decided to keep its powder dry and defer an interest rate increase for, at least, another month. The Fed cited uncertainty over a potential Brexit and recent underperformance in US job creation as factors weighing against an immediate rise: "Clearly this is a very important decision for the United Kingdom and for Europe. It is a decision that could have consequences for economic and financial conditions in global financial markets. If it does so it could have consequences in turn for the US economic outlook that would be a factor in deciding on the appropriate path of policy. Proceeding cautiously and raising our interest-rate target will allow us to verify that economic growth will return to a moderate pace, that the labour market will strengthen further, and that inflation will continue to make progress toward our 2% objective."
Deluded Brexiteers will no doubt believe that the Fed’s decision is part of a wider conspiracy of “scaremongering”, but surely that repost to any negative economic news or opinion must be wearing thin. The Greenback bought 120.6 Yen at the start of the year; with its status as a safe haven currency, the Dollar now buys just 104 Yen which will be giving Japanese exporters quite a headache. If the UK decides to remain in the EU, it is likely that the Yen will fall back whereas a decision to leave will cause it to appreciate even further.