World Bank Warns of Financial Turbulence if US Fed Raises Rates
The World Bank published a report today warning of possible financial turbulence in developing countries if the Federal Reserve raises interest rates this Thursday.
The BBC summarizes:
The World Bank has warned developing countries to brace
themselves for possible financial turbulence when the US Federal Reserve
starts to raise interest rates.
It could come as early as Thursday when the Fed concludes a policy meeting.
A new report from the World Bank says there will probably be a modest impact on developing countries.
But it also warns there is some risk that it could be worse.
The Bank says it is possible that there would be sufficient
disruption to capital flows into developing countries to harm economic
growth and financial stability.
‘Perfect storm’
US interest rates have been practically zero for more than six years
and as the economy continues to recover, the Fed is sure to raise
interest rates at some stage. The prospect has been a major concern for
financial markets all year.
Developing countries are bound to be affected when it happens and the first step might be imminent.
