Fed may be on hold due to Harvey and Irma

Although the latest projections of the Federal Reserve of the United States hint at another increase in interest rates until the end of this year, recent hurricanes may reverse this expectation. The analysts think that the hurricanes in the United States may prevent the US Federal Reserve (Fed) from raising the interest rates this year.

Goldman Sachs and Bank of America-Merrill Lynch lowered their expectations for the US growth rate for the third quarter as Irma hurricanes affected Florida this week. Hugh Young from Aberdeen Standard Investments said that that could be an excuse for the Fed not to raise interest rates by addressing to the hurricanes in the US.

Fed officials, who raised interest rates in March and June this year, signaled that there will be another interest rate increase until the end of this year. But, the weak inflation data has caused the Fed authorities to become more pigeons, and leading market participants have stated they do not expect interest hikes until 2018.

Recently, New York Fed President William Dudley stated that 2 hurricanes happened in the US may affect the timing of interest rate increase. In addition to the hurricanes, there are different obstacles in front of the interest rate increase this year. According to Chief Executive of Export Now Frank Lavin, the first uncertainty is going to be on the subject of the new Fed Chairman. Frank Lavin said that Fed should have wait-and- see policy during this period.

Market participants also point out that the Hurricanes are going to damage the insurance sector as well. Wells Fargo Equity Research Analyst Elyse Greenspan thinks that these companies could not disclose profits until the end of the year. The analysts predicted that the companies could lose about 60 million dollars in total.

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