The Federal Reserve has notified
the Senate Banking Committee that the central bank is not in a hurry to raise
interest rates. In her report Janet Yellen, head of the Federal Reserve,
noticed a solid economy but was disappointed about labor force participation
and a stagnant wage growth. Most likely, several months will go by before we
see the Fed’ boost rates.
Clearly the Fed is looking for more
improvement in the U.S. Economy as well as signs of higher inflation. When the
Fed last raised rates they expressed that rates would continue to raise at a measured
pace, which was meant to mean a quarter point per meeting. This time around the
Fed wants to be less predictable so investors and companies will not have
unfair advantages. The rhetoric coming from the Fed says that interest rates
will stay put for awhile, however some believe that the chairwoman is getting
ready to raise rates, possibly sooner than some would even expect. As March
changing some of the Ian-gauge to signal to the markets that rate hikes could
come as early as June.
It appears this is the first time the Fed will be raising the benchmark interest rate in 7 years since the last recession when they were forced to push back the benchmark almost to floor. I wonder if the economy is ready for this or how it will effect other aspects of the economy.
ReplyDeletehttp://blogs.wsj.com/economics/2015/12/16/fed-interest-rate-decision-and-janet-yellens-press-conference-live-analysis/
Why would the fed want to be less predictable so that investors and companies do not gain unfair advantages?
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