Most Wall Street investors and Washington Fed watchers now expect the Fed to
raise rates at this week's meeting, but a minority of economists warn a hike
could be a serious policy error. Moody's Analytics chief economist Mark Zandi
said the probability of a major Fed policy mistake is worryingly high and
rising, arguing it is difficult to slow growth without layoffs, higher
unemployment or a self-reinforcing negative cycle. Steve Englander, head of G10
FX research at Standard Chartered, called a premature hike given contradictory
signals in inf data and said the Fed should stand pat until those signals
weaken; a hike followed by a reversal to cuts within months would signal very
unstable decision-making. Michael Pearce, chief US economist at Oxford
Economics, said near-term odds of a hike have risen but the September decision
remains finely balanced; he still expects the Fed to hold rates unchanged.
