The Fed should have the courage to act

EVERY six weeks, financial markets hold their breath and wonder what the US Federal Reserve will say and do at its Federal Open Markets Committee (FOMC) meetings.

Every six weeks the press, investors and general public wait and watch for the outcome of each FOMC with a mixture of fascination, trepidation and for some, a small measure of revulsion - the latter because it is somehow counterintuitive that so much power is vested in the hands of so few who may not necessarily be equipped to make the right decisions at the right times, influenced as they are by personal bias.

The latest instalment of this drama unfolds this week on Tuesday and Wednesday. Last Thursday the federal funds futures market predicted a 22 per cent chance that there will be a second rate hike in six months; after Friday's weak payrolls report, the figure plunged to just 4 per cent.