Decision time on interest rates for US Federal Reserve

The world is watching as the US Federal Reserve meets over two days on Wednesday and Thursday, to take the crucial decision on whether or not to raise interest rates for the first time in nearly a decade.

A survey of 80 economists polled by Reuters found a little over half who only last week thought the Fed would go for it, now think it will hold fire a bit longer and keep rates at the current 0-0.25 percent range.

“It’s a historical event because it’s been seven years since the Fed cut rates to zero. For the first time we are approaching a situation where a major central bank might be able to get out of the zero bar and start a process of normalization of interest rates,” said Angel Ubide, senior fellow at the Peterson Institute for International Economics.

The US economy has been performing relatively well, the recovery adding trillions of dollars to the balance sheet and generating little inflation.

However the Fed cannot ignore the less rosy global outlook.

It has warned markets to be ready for a hike but indications are they also believe the odds are against such a move.

The decision is due to be announced at 20.00 CET on Thursday.