I think you probably need to take more economics courses and dijest .
When you read on the article that FED will raise the rate in 1stq of 98, did you think
twice what is the purpose for FED to raise the rate in current environment? To reduce the
inflation pressure ? Am I right? I think you probably agree.
The question now is there inflation pressure under the current economic environment ?
1) Most Asian currency depreciated significantly against the Dollar.
This will further reduce the inflation pressure in US, and make things cheaper, especially
the consumer's products. This is why CPQ DELL, IBM HWP those box maker had room
to cut price and still enjoy a good profit margin, because their cost on the parts are much
lower. As a result of price cut, the market is expanded significantly.So you already see
deflation effect in the PC business,and those effects are good for the box makers. However
, those effects are not so good for GM, F, C when they face the cheaper imported cars
from Japan and Korea in the US market.
Conclusion: No inflation pressure in US but deflation.
2) Korea, Thai, ...etc is in serous short of foreign reserve, the hike of rate in US will attract
more of local capital flowing to the US market to further kill the economy locally and
as a result will have negative impact to the US exporters in general.
3) What if FED decided to hike the rate ?
a) The US economy will slow down, and have less potential to dijest the cheap import from S.E Asia.
b) The cost for the US companies to borrow capital will be higher which willt further
degrade the capability of US corps to compete in the international market, not mention the currency effect.
c) As S.E. Asia had no place to export their cheap goods in exchange for hardly needed
dollars, this will further degrade the local economy and will further hurt the US economy.
So, now it is the time to reduce rate not increase. If FED wants to kill the world economy
and make headed to a global depression, now it is the time , i.e Hike the rate in 1 q of 98.
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