Freefalling oil prices have created an environment of uncertainty across financial markets but turbulence should not impede the Fed from hiking interest rates Wednesday for the first time in nine years.
The Fed is expected to lift its target fed funds rate off of zero, ending a seven-year era of historic, crisis-level rate policy. The central bank Wednesday will also provide economic and interest rate forecasts that could help shape the view of interest rates in 2016.
Both the pending Fed action and the plunge in oil, down 18 percent since Dec. 4, have come together as markets are increasingly worried that widening spreads in the junk bond market could be signaling a weakening economy and a rougher time for stocks. Credit markets became even more nervous Thursday over the liquidation of distressed debt fund — Third Avenue Focused Credit Fund, which halted redemptions.