By now, just about everyone agrees that the economy is in trouble.
The financial markets have already reacted to the thought that we might
be headed into another recession. The pundits are seriously debating
negative interest rates — charging people to keep their savings in a
bank — as the next desperate effort to help the economy.
Federal Reserve Chair Janet Yellen got lambasted in Congress by both
political parties. And another interest rate hike by the Fed — just
about everyone now agrees — is simply out of the question.
Even the minutes of the January Fed meeting show that Yellen might be having second thoughts about the rate-hike policy.
But get ready for another switcheroo: The economy is suddenly looking
better. I emphasize the word “looking” because it really isn’t actually
better — at least not by any appreciable amount.
Link: http://nypost.com/2016/02/17/why-the-fed-will-decide-to-raise-interest-rates/
I doubt that the Fed will raise interest rates. The economy has begun to look shaky and many are calling for a recession. Nobody truly knows if this is just a small rough patch or the beginnings of a recession, but I expect the Fed to play it safely and keep interest rates low. Especially since the last recession was so severe.
ReplyDeleteI agree with Van Dyke, it's unlikely the Fed will raise interest rate because that'll make investment less attractive, also if the Fed keep the interest rate low and promote investment we can see a slow upturn in the US economy which would be a positive effect for the domestic markets.
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