DEVELOPED market stocks fell Friday and bonds rose, pushing yields sharply lower, after the U.S. Federal Reserve cited weakening global growth and the recent upsurge in financial market volatility as its reasons for not raising interest rates.

    Stocks and currencies in emerging markets, however, which are more vulnerable to higher U.S. interest rates, welcomed the Fed’s decision Thursday to postpone “lift off” for at least another month, and rose across the board.

    A growing number of economists, including those at Morgan Stanley and Barclays, are now wondering whether the Fed will raise rates at all this year, given its concerns over growth and market volatility, as well as the strength of the dollar.

    “The Fed’s rather downbeat outlook came as an unwelcome surprise, and it’s likely to take a while for investors to figure out whether the Fed is seeing something that the rest of us aren’t,” said Michael Hewson, chief strategist at CMC Markets.

    Bank of England (BoE) chief economist Andy Haldane said Friday the BoE may have to cut interest rates if inflation remains low and global risks materialize. European Central Bank policymaker Benoit Coeure said global growth prospects have darkened, particularly in emerging markets.

    Fed Chair Janet Yellen said the global outlook has appeared to become less certain, adding that recent falls in U.S. stock prices and a rise in the value of the dollar were already tightening U.S. financial market conditions.

    The Fed’s fresh economic projections showed 13 of 17 policymakers still foresee at least one rate hike in 2015, down only slightly from 15 at the last forecast made in June. But it also trimmed its forecasts for 2016 and 2017 economic growth.

    Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1 percent to a four-week high. It was the index’s third consecutive daily increase, something not seen since early July.

    Yellen explicitly noted the central bank was focusing on the slowdown in China and emerging markets, saying one key issue is whether there might be a risk of a more abrupt slowdown in China.

    “Now it’s a waiting game again, and every upcoming meeting is on the table so long as data and conditions can justify a move. However, there is no guarantee that the conditions will be satisfactory ahead of the end of 2015,” said Lee Ferridge at State Street.(SD-Agencies)