After weeks of anticipation and debate, the Fed determined that it would postpone any interest rate increases. While the topic may reemerge before year’s end, it is closed for the moment. To what extent was this decision based on domestic versus global economic concerns, and how will it effect supply chains?
Recent currency devaluation by China, and subsequent and undeniable market turbulence, had a major influence on the Fed officials’ unwillingness to raise the rate. China, India and other emerging markets are still forecasting between 5-6 % GDP growth, which is less than what they have been producing over last 15 years.
That said, a steadily rising middle class and the resulting shifting economic patterns from manufacturing to service/consumption economies will continue to provide greater opportunity for sustained supply chain growth in those spaces.
In all, the Fed’s decision signals a clearly global economic system and an awareness of how global supply chains function.