Tuesday, February 16, 2016
Negative rate talk 'premature,' economy fine: Dudley
This is an interesting article about the recent talks of negative interest rates. Some say that it is premature and we should leave the interest rate unchanged. Others fear that we might be heading into a recession and want the fed to intervene. Key components of the U.S. economy remain healthy, and recent speculation about the Federal Reserve
adopting negative interest rates is "extraordinarily premature," a top
Fed official said Friday, amid mounting concerns about slowing growth. http://www.cnbc.com/2016/02/12/feds-dudley-key-us-sectors-in-good-shape-financial-system-clearly-stronger.html
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I agree with this article entirely. Conversation about a negative interest rate is nothing but premature. With that being said, all economic activity does need to considered and addressed. The fear of heading into another recession is real with all of the foreign market struggle around us. For the time being, many components of the U.S. GDP are at healthy levels and until something significantly changes, then interest rate talk can begin.
ReplyDeleteThis is an interesting article. I also wrote a blog about negative interest rates as Janet Yellen has stated that this could be a possibility in the future. However, she did state as well that the economy would have to drastically decline before this option would be seriously entertained. One of the more uncertain parts of the negative interest rate is that it has not been shown through trial or any other way whether or not this truly does help to get the economy back on track or not. Countries that have established a negative interest rate yield inconclusive results thus far. It will be interesting to see in the future where this discussion goes, however I agree with the above comment that this discussion is premature in nature.
ReplyDeleteThe discussion on whether or not our economy is healthy or heading to another recession has been ongoing for a couple of months now. There are signs that point to both outcomes and I think this has to be considered. If you wanted to explain the health of our economy, you could look at the unemployment rate and say that we are near our natural rate of unemployment. If you want to say we're heading to another recession, you could point to our lack of GDP growth as well as the performance in the markets so far this year. Whichever way you want to frame it, it is important to understand the viewpoints of both sides.
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