Fed's rate decision key to market volatility
US stocks flirted with records before falling back last week as investors wondered whether the Federal Reserve could stave off a deflation scare at its meeting this week.
The low interest-rate era that began in 2008 was supposed to end in December, when the Fed hiked rates for the first time in nearly a decade. But the shock waves that spread from China through global markets caused the central bank to pause. When those shock waves subsided in the spring, traders bet the central bank would resume hiking at its meeting on Wednesday. But jobs growth in May was surprisingly weak and Fed chairwoman Janet Yellen has already tacitly promised not to raise rates.
She has a daunting task on Wednesday, as a surge in Treasury bonds, gold and other safe-haven assets last week suggests that not even the promise of monetary stimulus is calming markets.
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