Threadneedle: Federal Reserve interest rate decision

Dave Chappell, Fund Manager at Threadneedle Investments, commented: "The housing market is the key area of risk in the US economy. So far the sub-prime crisis has been a financial rather than an economic event, but we are watching very closely for signs of the deterioration in the housing market having any impact on consumption and hence wider economic activity. The US consumer has weathered previous storms very well, but we are not being complacent. For the time being, though, we think growth will come in at around 2.2% for this year and that moderating inflation readings will allow the Fed to reduce rates before year end if required."

"Although Q2 company earnings are coming through stronger than expected, Q3 earnings will be key as these will capture the recent period of turbulence caused by subprime woes. There are certainly investment opportunities to be found in the US market for those that are prepared to do the necessary research. The US remains by far the world's largest equity market and any serious portfolio should certainly have a meaningful exposure."