– This is the script of CNBC's news report for China's CCTV on September 15, Tuesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
The Fed kicks off a two-day meeting on Wednesday and whether or not it will take the opportunity to raise interest rates for the first time in almost a decade remains highly debated.
Will the Fed decide to raise rates this week or December, or won't happen until next year?
Senior analyst Thomas Costerg from Standard Chartered told CNBC that another possible shutdown of the US government in October,along with vague communication from the Fed and recent market volatility, adds up the possibility of a December rate hike.
114322 This will be a main driver of the currency market actually, this is probably gonna boost the U.S. dollar against both EM and DM currencies because you still have this fed with the tightening xxxx. And, we think the fed they probably want to raise rates. I think December would be a good window, pushing back in 2016, you have this problem with 114345
114345 credibility because increasingly the fed would have this credibility issue. They have been speaking about a 2015 rate hike so many months, so many weeks. They have to go now, and now I mean between now and December. 114357
Some believe rate hikes won't happen this year, despite the fact that the decision will hurt the Fed's credibility.
Jan Hatzius, chief economist at Goldman Sachs, suggested his clinets to ignore all the talk that the only two options facing the Federal Reserve this week are hiking interest rates and standing pat. He said the U.S. central bank, given the current environment, should actually think about easing.
With benchmark interest rates near zero, the easiest way to ease would be for Fed Chairwoman Janet Yellen to signal a rate move in 2016, later than markets currently expect, Hatzius said in a note to clients.
However, what if the FED were about to raise rates this week?
Economist Peter Morici wrote to CNBC in a commentary that here are things that you should know.
1. Mortgage rates are not likely to rise much
The impact of Fed tightening importantly depends on whether increasing the federal-funds rate pushes up the 10-year Treasury rate, because rates on mortgage, corporate and municipal bonds follow that rate up and down.
When Ben Bernanke pushed up short rates in 2004-2005, those long rates hardly budged, because the Chinese government was purchasing Treasurys at a maddening pace to keep the yuan cheap against the dollar.
Nowadays, Beijing is selling Treasurys but private investors in Asia, doubting prospects for the world's second largest economy, are rushing into U.S. securities and other assets.
2. Bank fees and car loans will get more expensive
But the good news is that banks may start competing more for your money and pay higher rates on 1 to 5-year CDs.
3. Unemployment won't be much affected
4. Economic growth and inflation will pick up
5. Stock prices will continue strong
For the EM, one analyst told us now is an opportunity, once in a decade.
[Allianz Chief Economic Adviser Mohamed El-Erian] "One of these things that things that happens once a decade, that emerging markets go through a fundamental re-pricing that overshoots and that creates the potential for returns overtime. But be careful because it's going to be incredibly volatile in the next few months."
CNBC's Qian Chen, reporting from Singapore.