“Harvey damage will force Fed to hold rates”

The damage caused by hurricane Harvey will dampen GDP growth to an extent that will force the Fed to forget about hiking rates further this year, it was claimed.

|

PA Europe

Weather forecaster AccuWeather predicts damage done by Harvey will amount to $190bn, equivalent to 1% of US GDP. “This will counter GDP growth and likely force the Federal Reserve to postpone any interest rate changes for the remainder of the year,” it said. 

David Page, an economist at AXA IM, agreed the impact of Harvey will lead to a softening in data over the coming months. However, he added that this softness should have passed through by December.

“Therefore, we maintain that the Federal Open Market Committee will still hike in December, but acknowledge such a view requires an improvement in the data,” said Page. “But without that [happening], the Fed may well put off the next hike into 2018.”

MORE ARTICLES ON