The Fed announced that it will not raise interest rates at the press conference to focus on China's risks.

Federal Reserve Chairman Yellen said at a press conference after the FOMC on Thursday that it still expects to raise interest rates before the end of the year. There is still the possibility of action in October, and the Fed can hold a special press conference if necessary. Regarding the overseas situation, Yellen said that the Fed mainly focuses on China and other emerging markets, and stresses concerns about China's economic downside risks and decision-making capabilities.

Wall Street has previously reported that after the end of the two-day Federal Open Market Committee (FOMC) meeting on interest rates, the Fed announced at 2 pm EST on Thursday that the key interest rate will remain unchanged at 0-0.25%.

The FOMC statement said that the recent global economic and financial situation may limit economic activity to a certain extent, which may cause further downward pressure on the short-term inflation rate. The economic and employment market risks are still close to equilibrium, but closely monitor the evolution of the overseas situation.

Still expecting a rate hike this year does not rule out the possibility of October
Yellen’s opening speech focused on the official resolution statement and reiterated the conditions for the Fed to raise interest rates in the future: “When we see further improvement in the labor market, there is reason to believe that inflation will return to the target level of 2% in the medium term.”

The weak global economy seems to be a key factor in damaging the Fed’s confidence in returning to inflation: “Inflation has been below target, and the recent global situation may bring downward pressure on inflation.”

When someone asked Yellen, what kind of uncertainty would make the Fed not raise interest rates, Yellen replied: "This is a very difficult question." She said the Fed focused on two things: employment and inflation.

“Of course, there are many uncertainties in the global economy.” Yellen said: “But we ask ourselves, how the global economic and financial development has affected the risks of our two major goals, and whether they have led to an imbalance of risks that make us think I have to wait for the solution.” When it comes to raising interest rates, Yellen stressed that “the specific time for raising interest rates is far less important than the expected path of the entire interest rate to the economy”.

At the same time, Yellen said that it is still expected to raise interest rates before the end of the year.

“Every meeting is possible.” This means that the Fed does not rule out the possibility of a rate hike in October. Yellen said that the Fed can hold a special press conference if necessary. (There was no news conference in October)

Concerned about China's economic risks and decision-making ability
Since the overseas situation is one of the main factors affecting the Fed’s non-interest rate, Yellen explained that the Fed is particularly focused on the risks of China and emerging markets. She said that in August, the financial market reflected China's risks to a certain extent, and important emerging markets were negatively affected.

Yellen said that the Fed is expected to experience a slowdown due to China's economic rebalancing. But the risk is that there may be a more sudden decline than expected, probably because Chinese policymakers have failed to take a good response.

“The financial market progress we saw in August this year reflected concerns about the downside risks to China’s economic performance and the level of proficiency of policy makers in dealing with these issues,” Yellen said.

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