In what may sound like a cry for help, central banks across the globe are reaching out to their American counterparts to finally take the step of raising interest rates. Their message is clear: We are ready. Do it now.
Federal Reserve Chair, Janet Yellen, has been holding out on the rate increase for most of 2015, hinting at a September date but pulling back with each new data release that might indicate a definite growth in the U.S. economy.
With the continued turmoil in world markets, resulting primarily from the Chinese meltdown, bankers were optimistic of the Fed’s September move. However, Vice Chairman Stanley Fischer told reporters on Friday that it is too early to determine when the rate hike will take place.
He believes that although "there was a pretty strong case" for a September hike, “it's too early to tell: The change in the circumstances which began with the Chinese devaluation is relatively new and we're still watching how it unfolds, so I wouldn't want to go ahead and decide right now what the case is—more compelling, less compelling, et cetera."
Banking Conference
At a global central banking conference that was held last week in Jackson Hole, Wyoming, after a week of roller coaster market activity, visiting policymakers hinted to the group of major bankers of the Fed’s intention to initiate the September hike which was good news for representatives of foreign countries.
According to a top central banker from Mexico, "If the Fed tightens, it will be due to the fact that they have a perception that inflation is drifting up, but more important that unemployment is falling and the economy is recovering.”
With September looming ahead, the Fed is left with only days to make its decision. Meanwhile, most central bankers are standing in the bleachers cheering it on.