Some Events Might Still Deter Fed From Raising Rates in December — Market Talk

What happened

Macquarie Group strategist Thierry Wizman said several developments could deter the Federal Reserve from raising interest rates in December, or from making a 50-basis-point increase. He cited a U.S. government shutdown, further oil-price declines tied to peace, and a deeper stock sell-off if concerns about artificial intelligence worsen. The next decision is scheduled for Dec. 9.

Confirmed

Global impact / market context

If these developments weaken economic conditions or confidence, the Fed may have less reason to raise borrowing costs. That could ease pressure on companies’ financing expenses and support demand, while a stock sell-off could still reduce investor wealth and make businesses more cautious about spending.

Analyst inference

Wizman says the baseline view is that the Fed will raise interest rates once at its December meeting, while several developments could prevent a rise or a larger increase. Higher rates can make borrowing costlier, which may affect company spending and investor choices, but no outcome is certain.

Analyst inference

What to watch

1. Whether a U.S. government shutdown occurs, since the strategist lists it as a development that could deter the Fed from raising rates in December. Analyst inference
2. Whether oil prices decline further on prospects for peace, as Wizman identifies this as another possible reason for the Fed to hold rates. Analyst inference
3. Whether stock selling deepens as concerns about the artificial-intelligence story worsen, which could affect confidence ahead of the Fed’s scheduled Dec. 9 decision. Analyst inference

Evidence

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