The sagging economy will make it difficult for the Federal Reserve to increase interest rates at its policy meeting Sept. 16-17, says New York Post columnist John Crudele.
Non-farm payrolls rose only 173,000 in August, and the Atlanta Fed's forecasting model puts third-quarter economic growth at just 1.5 percent.
"The Fed wants to raise rates, it must raise rates, but it is becoming increasingly impossible to raise them," Crudele writes
. "The Fed’s near-zero interest-rate policy hasn’t helped the economy .... So the Fed knows it needs to reverse course and raise rates."
The central bank has kept short-term rates at a record low near zero since December 2008.
"The economy is withering," Crudele says. "If rates aren’t raised soon, the Fed may feel that it will again miss its opportunity to make a move." The Fed also needs to boost rates because it will soon have to lower them to counter economic weakness, he says.
But Crudele thinks the central bank will stand pat this month because of that economic weakness.
While Fed officials have indicated they are still likely to lift rates this year, Fortune senior editor Stephen Gandel isn't so sure that's a good idea.
"The recent market turmoil suggests that investors don’t believe the economy is on as solid footing as Fed officials seem, or at least would like, to think," he writes
. The economy grew 3.7 percent in the second quarter.
As for the stock market's volatility, the S&P 500 plunged 11 percent from Aug. 17 to Aug. 25, then rebounded 6.5 percent through Aug. 28 and has since dropped 2 percent.
"The stock market says a lot, and it talks every day," Gandel says. "But, to borrow a phrase, just because the market’s lips are moving doesn’t mean it’s lying. The Fed should listen up."
Many economists expect the central bank to raise rates in September or December.
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