Krugman Fighting Consensus Says 2015 Fed Rate Increase Unlikely
source: http://www.bloomberg.com/news/2014-12-14/krugman-says-fed-is-unlikely-to-raise-interest-rates-in-2015.html
Paul Krugman a famous American economists claims that the Federal Reserve will not follow through with raising interest rates as soon as they have claimed. He cites the low inflation and slow global growth as reason why they will not. Krugman has been known for wanting the government and the Fed to do more during the financial crisis. He claims Bernanke was "too timid" and Obama stimulus package was not enough to revive the economy. 10 year treasuries have came down back to mid 2013 levels and the falling oil prices will have a negative effect on inflation.
Some economists believe the spike in consumer demand related to the falling oil prices will be enough to down play the risk to inflation. Krugman as well as other economists believe the job market is not totally back either due to the slow wage growth.
Krugman said "there is a very strong case that the United States is still a very depressed economy." As for who is right, we will have to wait until the end of 2015 to know what will happen.
This is an interesting prediction for Krugman to make, especially in light of the speaker we heard at the Economic Outlook Conference who seemed to believe that the Federal Reserve would be raising the interest rates in the near future. It seems that even intelligent people, experts in their fields, can be wrong sometimes when it comes to predicting the future.
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