The U.S. Federal Reserve building, Aug. 9, 2011. AFP/Karen Bleier
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Emerging markets have spent more than two years in a slow-motion crisis with the threat of a U.S. interest rate rise hanging over them.As higher U.S. interest rates raise the global cost of capital and depress the price of their commodity exports, Fed tightening has historically spelt trouble for emerging economies that still overwhelmingly rely on overseas investment.Increasingly, policymakers as well as investors are hoping the Fed will get a move on.With a Fed hike now seen as early as next month, there's at least some hope that a healing process can begin, including via weaker currencies, said Kamakshya Trivedi, managing director for EM research at Goldman Sachs.U.S. consumer inflation at the moment is just 0.1 percent, versus the 2 percent target that guides Fed policy.Indian central bank chief Raghuram Rajan also says U.S. growth will benefit the rest of the world.With their growth premium to richer peers at 15-year lows, weak trade, investment and company earnings, and currency weakness fanning inflation and default risks, emerging markets currently have little allure.But things can change if, as Goldman's Trivedi says, Fed-induced volatility forces adjustments.
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