ZEW President Fuest Commments on the Federal Reserve's Decision on Interest Rates: "If the Inflation Rate Rises, a Turnaround in Interest Policy Is Inevitable"

The Federal Reserve announced on September 17 that the Federal Funds Rate will remain at a target rate of 0.0 to 0.25 per cent until the end of 2015. The President of the Centre for European Economic Research (ZEW), Professor Clemens Fuest, comments on the decision.

"There are two reasons supporting the Fed's decision against raising the rate: first, the weak development of the emerging economies, which is accompanied by a depreciation of their currencies against the US dollar; and second, the currently very low inflation in the US.

At the same time, there are clear signs – in particular the low US unemployment rate of five per cent, that is, half the level seen at the peak of the financial crisis in 2007 – that a reversal in interest rates is due to come in December or, at the latest, in early 2016. If this trend is to continue, the inflation rate will rise, and a turnaround in interest policy will be inevitable."

For more information please contact

Professor Clemens Fuest, Phone +49(0)621/1235-100, E-mail fuest@zew.de