What does the yuan devaluation mean for interest rate rises?

 —  Article by Lois Avery

After China raised eyebrows earlier this month when it unexpectedly devalued its currency, all eyes are now on the impact it will have on monetary policy decisions of the US Federal Reserve.

Although the 4 percent devaluation has made headlines worldwide, it shouldn’t cause a seismic shift in the global economy. But it is the largest yuan depreciation for 20 years and its effects will be felt beyond China.

For while China’s economy is slowing, the U.S. economy is getting back to strength – with interest rates expected to rise from historic long-term lows of almost zero.

The Federal Reserve had been sending signals that a rise could happen as soon as September, but will the decision of the Chinese government lead it to put its decision on hold? And what does this mean for investors?

Watch the video to hear Andrew Burrell, Head of Forecasting at JLL EMEA, outline his views. If you are located in China you can watch the video on Brightcove.

 

 

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