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As we head towards the Fed decision on 16 December it is time to look at the current economic situation and the potential market impact of any action that the Fed may (or may not) take.
Policymakers, including Fed chair Janet Yellen, have been talking about increasing US interest rates for some time now, and considering strong growth in the US economy and the steady fall in unemployment, the central bank would have justification to do so.
Ms Yellen is concerned that if interest rates stay at record lows for too long it could lead to another credit bubble, and if rates aren’t hiked now it could lead to several hurried hikes next year. Most traders are anticipating an interest rate hike and the Fed will not have to worry about a major reaction from the markets should they increase rates.