Federal Reserve may not hike rates next week

Federal Reserve may not hike rates next weekWhile the U. S. Federal Reserve is widely expected to increase key interest rates as soon as next week, many experts are of the view that foreign uncertainties can discourage the apex bank from taking any such decision.

The jobs data for the month of October was unexpectedly strong, suggesting that the world's leading economy has returned to normal growth. The rate of unemployment now stands at 5 per cent, which is normally taken as full employment by several economists.

But, the Federal Reserve has a dual mandate - ensuring maximum employment and keeping rate of inflation at a target level of 2 per cent. While the apex bank has seen enormous success in the field of employment, the target of keeping inflation at 2 per cent hasn't been reached.

The situation prompted many experts to predict that an interest rate hike will likely not be announced before the end of this year. Some even predicted that it will not come before middle of 2016.

Charles Evans, Chicago Fed President and a voting member of the FOMC, said recently that the central bank could be "well into" 2016 before the goal for inflation is achieved to support a rate hike.

The Federal Reserve cut key interest rates to near zero in December 2008, at the peak of global economic crunch, to provide a boost to American economy. The FMOC meeting is scheduled for December 15-16, 2015.