WASHINGTON (Sputnik) — The likely increase of the US interest rate this month will boost the economic expansion of the United States, but could negatively impact emerging markets, Moody’s Senior Vice President Steven Hess said in a press release on Monday.
“Such a move would reinforce our view that the US economy is on track for above-trend growth,” Hess stated.
Moody’s Investors Service also noted that “higher rates could bring risks to some emerging market sovereigns.”
The ratings agency has argued that large emerging markets, including Brazil, Russia, Turkey and South Africa, will likely be most affected by the interest rate hike because they face “severe domestic challenges” that contribute to exchange rate and financial market instability.
Atlanta Federal Reserve Bank President Dennis Lockhart has previously stated that the next FOMC meeting, which is scheduled for December 15-16, can become a historic gathering.
Moody's suggested that the interest rate will likely increase by a small amount, and subsequent rate hikes will be gradual.
