"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise"
- Stanley Fischer, Fed Vice Chairman
While US economic growth accelerates, the rest of the world is struggling to grow. Continental Europe and Japan are on the verge of another recession and China's economy is also slowing. Thus, the Fed officials are concerned about the impact a slowdown in elsewhere in the world may have on the US economy, and warned that it could force them to delay the interest rate hike. Majority of Fed policy makers expect to raise the benchmark interest rate some time next year, according to forecasts released on 17 September following their last meeting. The International Monetary Fund has revised downwards its outlook for global growth in 2015, forecasting it will be 3.8%, compared with a July prediction for 4%, after a 3.3% expansion this year. Along with headwinds, which come from overseas, America is facing another internal problem that might get serious. Charles Evans, Chicago Fed President, said that a stronger US Dollar is an obstacle to the central bank's ability to meet its inflation mandate and will undermine growth, as it is going to have an effect on net exports, as well as lead to lower import prices.
Meanwhile, the Federal Reserve's eventual rate increase, the first since 2006, will not damage the global economy, Federal Reserve Vice Chairman Stanley Fischer said, highlighting that normalization of the monetary policy should be manageable for the emerging economies.
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