You don’t need to be in Washington to know when US Federal Reserve chairman Alan Greenspan and his brethren emerge from their regular policy-making huddle. The global finance community awaits the result with bated breath. But in a break from the typical secrecy that shrouds Federal Reserve meetings, the outcome of the officials’ latest sit-in, held on August 10, was expected. As advertised, the Fed raised its target for short-term interest rates from a 46-year low of 1% at the beginning of 2004 to 1.5%. It marked the second interest rate rise since June.
US officials play down the effects that climbing rates in the US can have on other countries. “The rise in interest rates shouldn’t have a major impact on Brazil or other emerging market countries,” US Treasury under secretary John Taylor told reporters recently. He added that rate spreads between Brazil and Argentina relative to US rates have narrowed greatly over the past one and a half years.
