By Isaac Cohen*
This end of summer lull was upset by a rapid succession of scares in several fronts. It all started with the daily plunge in Chinese stock markets, which became a worldwide rout, with the US stock market falling 10 percent in a week. Additionally, a slight devaluation of the Chinese yuan deepened the weakness in commodity markets, with oil prices falling under $40 per barrel.
By the end of August, calm returned to world stock markets and oil prices jumped back 17 percent in two days, to more than $45 a barrel. However, in the background lingered the question how the August turmoil will influence the foretold decision by the Federal Reserve of starting the interest rate liftoff.
There are two divergent positions on this question. On the right, Martin Feldstein, Harvard Professor and former economic advisor to President Ronald Reagan, together with the influential head of the Heritage Foundation, former Senator Jim De Mint, Heritage Foundationsay the central bank should not wait any longer. On the left, the International Monetary Fund, Harvard Professor and former economic advisor to President Barack Obama Lawrence Summers, and Columbia University Professor and Nobel Price winner Joseph Stiglitz, say the central bank should wait.
The answer will be announced at the end of the next Federal Reserve Open Market Committee meeting, in Washington on September 17.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.