The long-awaited speech by Fed Vice President Stanley Fischer at the traditional meeting of central bankers in Jackson Hole did not reveal all the Fed's cards but made it clear that two very important things were to be understood: 1) the increase in US interest rates will be "small and gradual"; 2) it is by no means excluded that the first mini-raise could already take place on 16 and 17 September when the Fed board will meet to take stock of rates in the light of the trend in the American economy.
All observers interpreted Fischer's words as a green light towards the possible immediate increase in Fed rates despite the market turmoil and after the Chinese shocks, but they are convinced that the increase, if it really takes place in the coming weeks, will not go beyond 0,25% and will allow American rates – as Fischer himself underlined – to remain below the level of the British ones.
Certainly, Fischer added, the Fed will not pass from an "extremely accommodating to a stringent" monetary policy: everything will be done gradually and carefully, but raising interest rates is now on the agenda.
