IS THE RATE HIKE IMMINENT?

Since 2009, the US government has raised the debt limit 6 times, increasing it by US$5,709B  to US$18,113 to date.

Taking this into consideration, US tax receipts is not enough to cover the the government expenditure, and thus the need to raise debt to cover the difference. With US$5,709B raised since 2009 at near zero interest rate, any interest rate hike will not only increase the borrowing costs for the government as the US will likely to continue issuing debts to cover its own shortfall.

When the amount runs into trillions of US$, the interest payment will be a nightmare. So will the Federal Reserve take on a hawkish stance knowing that it could cause a ripple effect which will result in heavier borrowing costs for the US and impact upon its trade balances as US made goods become expensive in the global market?

Just today the OECD trimmed the global economy outlook to 2.9% vs 3.3% previously. Therefore a potential interest rate hike could tip the outlook below 2.9%.

China meanwhile released its export and import numbers which were far from impressive. Exports dropped 6.9%  while import fell 18.8%. The trade surplus widened US$61.64B. The trade imbalance with US could widen further should the US$ continue to strengthen.

Maersk also reiterated recently that global GDP is worse than forecast based on their knowledge of the amount of goods shipped globally.

Against such a backdrop, I am compelled to opine that a rate hike should not happen. But the Federal Reserve's reputation is at stake. So I think a rate hike, while not imminent, could be possible, just so the proponents of a rate hike stay of f its back. It will be followed by a long pause before any rate hike kicks in again.

The above is just my opinion of course.