Some 83% of delegates attending the conference believe the Fed should start hiking its main interest rate as soon as possible. The Dutch are taking the same line as their southern neighbours, who are also advocates of a rate rise.
The Fed’s decision to keep interest rates on hold for now two weeks ago has gravely dented its credibility not only in the eyes of fund selectors, but also deeply disappointed most asset managers. While the choice of the Fed to keep interest rates at zero was apparently a direct response to uncertainty in emerging markets, the EM equity managers attending the event in Amsterdam were not particularly amused by the life buoy thrown out by the Fed’s monetary policy committee.
A backward-looking Fed
“Everyone is waiting for the Fed to raise rates. It would be nice to get that out of the way,” said James Gotto, an emerging markets small cap manager at Schroders. “Yellen has repeatedly said she would hike rates this year, but now she is changing course,” added Paul Rogers, manager of the Lazard Emerging Markets Core Equity Fund.
Donald Amstad (pictured left), business development director Asia at Aberdeen Asset Management, even went a few steps further. “The Fed is not communicating well with the markets, and their last statement [on September 17th] was catastrophic,” he said. According to Amstad, it seems the Fed has shifted from so-called ‘forward guidance’ to ‘backward guidance’, since the Fed’s decision to not raise interest rates was inspired by market concerns around China. “The Fed is supposed to be leading, but they have failed miserably on that. Every measure the Fed now uses [to set interest rates], is backward-looking instead of forward looking.”
Click here to see an overview of all voting results from Expert Investor Netherlands.
