Fed's indecision rests on government's unwillingness to commit

Much to be expected, the US Federal Reserve held interest rates steady once again following a two day FOMC meeting that concluded on Wednesday. Fed Chair Janet Yellen cast a cautionary tale over the direction of the world economy with doubts raised whether the strength of US economic growth was concrete enough to sustain consistent setbacks seeping through from their counterparts in the developed world.

In Wednesday's article I said it was becoming difficult for the Fed to defend its strategy of keeping interest rates unmoved after issuing a guide, the so called "Dot Plot", in providing the market with some clarity of the pace that would be set in hiking rates throughout the next 3 years.

December's liftoff was disguised in confidence and perhaps even a show of arrogance to other central banks who've resorted to interest rates below zero in a last bid attempt to evade deflation. Needless to say the road to normalisation is fraught in containing the onset of policy decoupling and as a result has seen the negative externalities ploughing their way into US economy.

I am of the belief that nations, especially those who make up the majority of global GDP and thus direction, benefit greatly from policy coordination. We've witnessed this simply by observing the actions of central banks in developed nations feeding their economies with a mass money creating bonanza at artificially low rates.

You can't fault central bankers for finding the propensity to enact similar measures to their peers as it fell in line with global policymakers agenda of coordination. So where has it all gone wrong then?

Quite simply the scarcity of bold fiscal policies aimed at addressing failed systemic mechanisms that brought about the height of the financial bubble in 2008/09 as well as exploring new ways of implementing regulations with rigid framework to prevent the same from occurring again.

Yet we continue to see the ignorance of world governments, most importantly those representing the bulk of the world economy, in delaying the process everytime an economic inconveneince spoils the outlook of their nations economy by propagating voters ears with utopian policies.

Until such time we see these governments take radical steps to correct the mishaps hurting their activity, the longer the world will sit with the problem of low growth coupled with deflation.

The Fed’s missing dot belongs to the St. Louis Fed’s James Bullard https://t.co/detoU2K5GQ pic.twitter.com/Gin7suB1zv

— Bloomberg Markets (@markets) June 17, 2016