Given the Federal Reserve's dual mandate of supporting maximum employment and
stable prices, "we view outright rate hikes as unlikely due to their potentially
negative impact on the economy and, ultimately, the labor market," SEI's Jim
Smigiel says in a note. As other global central banks, for example, the European
Central Bank, aren't officially tasked with a dual mandate, they are more likely
to focus heavily on price stability, making rate hikes in these regions more
conceivable, Smigiel says. "Nevertheless, we expect global central banks to
follow the Fed's lead to some degree, as major deviations from the Fed's rate
path could destabilize other regions' foreign exchange rates and capital
markets."
