The Fed has a difficult task to do. They have to analyze what is going on in the economy and then using all of that data and information, do their best to try and predict where the economy is moving, and then intervene to move it where they think it ought to go. With so many variables influencing the economy, this is a daunting task.

What is the Fed’s plan?

The Fed made a statement last year finally deciding to move ahead with increasing interest rates. Higher interest rates were meant to signal the economy was strong. They cited a growing job market as their primary reason to believe the economy could handle higher rates. They planned to gradually increase the rates, with a hike about four times every year.

What are their obstacles?

There is more to consider than just jobs. Any number of factors could affect the US economy and it is very difficult to have the foresight to anticipate all of them. For the Fed to continue to increase interest rates without impeding future growth, they need to be confident no other factors will cause economic difficulties in the near future.

The US however, faces a few threats. First off, falling oil prices are hurting big energy companies. While we may enjoy cheaper gas, the low prices are often a signal of a struggling global economy. Europe is weaker than it has been, and shows no immediate signs of improving. China, the world’s second biggest economy, is slowing down and experiencing extreme bouts of volatility.

All of these factors could prove to be troublesome for the US. a weaker global economy means less countries will be willing to buy American goods. Volatility in an economy as big as China’s creates fear and uncertainty in the markets here at home. Not to mention, the fact these factors make the Fed’s job so difficult causes uncertainty in itself. Many investors do not believe the Fed will be able to raise rates under these current conditions, and this unknown leads to more swings in the stockmarket.

What did the Fed decide?

After their meeting on Wednesday, the Fed kept rates the same, although maintain they are committed to raising rates as previously saying. Other experts are less convinced, saying they doubt the Fed will follow through, and if they do they will only raise rates twice this year, not four times.