Fed may stop, others may not

Following the Fed's decision on Tuesday to pause, Bloomberg columnists John Berry and Caroline Baum think we won't be seeing any interest rate hike any time soon.

Berry says: "For now, the best guess is probably that there won't be a rate increase next month." He added that "a majority of the committee thinks slower growth and the lagged effect of previous rate increases will do the job".

Baum thinks that the rate hike cycle is at an end because the economy is already showing signs of slowing.

Meanwhile, equity investors are now thinking that maybe a slowing economy is not so good for stock markets. From Reuters:

U.S. stocks fell for a fourth straight session on Wednesday, tumbling in the last hour of trading, as worries about slowing economic growth, higher oil prices and a stumbling housing market drove selling...

The Dow Jones industrial average slid 97.41 points, or 0.87 percent, to end at 11,076.18. The Standard & Poor's 500 Index declined 5.53 points, or 0.43 percent, to finish at 1,265.95. The Nasdaq Composite Index inched down just 0.57 of a point, or 0.03 percent, to close at 2,060.28...

U.S. crude oil futures rose after the government reported drawdowns in crude oil, gasoline and distillate supplies and amid a production outage in BP Plc's Prudhoe Bay field in Alaska, the largest in the nation.

Earlier yesterday, however, Japan's Nikkei 225 had risen 1.2 percent to close at a two-month high of 15,656.59, boosted by a report of strong machinery orders. From AFP/CNA:

Japanese private sector machinery orders in June rose 8.5 percent from the previous month, soaring past market expectations of a decline as Japan enjoys the longest recovery in decades, the government said...

For the three months to September, core machinery orders are seen rising 4.9 percent from the previous quarter.

Elsewhere in Asia, China's trade surplus posted another record high. Again from AFP/CNA:

China's trade surplus in July hit a record 14.61 billion dollars, offering further evidence that the Chinese economic machine is continuing to race ahead.

July exports were up 22.6 percent to 80.34 billion dollars from a year ago, with imports rose 19.7 percent at 65.72 billion dollars, the official Shanghai Securities News reported, citing an unnamed customs official.

In contrast, the UK saw both exports and imports falling in June as its goods trade gap narrows. Nevertheless, interest rates in the UK are now looking more likely to rise than those in the US, as Reuters reports.

Explaining last week's quarter percentage-point increase, BoE Governor Mervyn King said markets should not have been surprised by the move. Policymakers had been alarmed by data revisions showing much less spare capacity in the economy than previously thought.

Inflation, already running half a point above target, was set to climb further on higher energy bills and college tuition fees, giving a 50-50 chance it would exceed 3 percent -- the level that would force the governor to write an explanatory letter to the government...

The BoE also predicted stronger economic growth over the next two years than it did in May, moving higher initially on a pick-up in exports and business investment coupled with steady growth in consumer spending.