Warren Buffett doesn’t think a rate hike from the Federal Reserve in September is guaranteed.
After the July jobs report on Friday, economists’ expectations that the Fed will raise interest rates next month increased.
The US economy added a healthy 215,000 jobs, the June data was revised upwards, and the unemployment rate held steady at a seven-year low of 5.3%. Many economists saw this as a sign that the Fed saw “some further improvement” in the labour market, just like it had outlined in its last policy statement.
In an interview on CNBC Monday morning, Buffett said it will be tough for the Fed to raise rates when foreign central banks are keeping rates low to stimulate their economies.
“It may very well happen [in September], but I don’t think it’s an easy decision when rates are considerably lower in Europe, and you may be affecting imports and exports,” he said.
It’s not just Europe. As we highlighted over the weekend, some economists including Goldman Sachs’ David Kostin say economic weakness in China may once again postpone the first rate hike in a decade.