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Uneasy Calm About US Rate Hike
World Economy

Uneasy Calm About US Rate Hike

An "uneasy calm" prevails in financial markets about the first increase in US interest rates in almost a decade, which is widely expected later this month, the Bank for International Settlements said in its latest report.

The restrained reaction, especially from emerging markets, to the Federal Reserve's signals has been encouraging, the quarterly update from the Switzerland-based forum for major central banks said, though it expected volatility to return, Reuters reported.

"Calm has reigned over financial markets, but it has been an uneasy calm," said Claudio Borio, the head of the BIS Monetary and Economic Department.

With interest rates in many parts of the world testing "the boundaries of the unthinkable day after day", Borio said it was not surprising how sensitive markets remained to the actions of major central banks.

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