Tuesday, November 8, 2016
Fed Signals It’s on Track to Raise Interest Rates in December
The Feds are ready to raise Interest rates for the first time this year in December. The Fed's policy making committee stated " Inflation has increased somewhat since earlier this year but is still below the committee's 2 percent longer-run objective". Although, the economies health has still been improving and the unemployment rate stood at 5 percent in September, which is close to the historically normal level; Also, Inflation rose to 1.2 percent over the last 12 months ending in September, up from 0.8 percent during the 12 months ending in July. The economy has expanded at an annual pace of 2.9 percent in the third quarter.
"Higher Interest rates will slow Economic growth, but proponents of a rate increase argue that raising rates slowly could extend the current economic expansion. If the Fed waits they say, it may then need to raise rates more sharply, which has often pushed the economy into a recession."
http://www.nytimes.com/2016/11/03/business/economy/federal-reserve-interest-rates.html?rref=collection%2Ftimestopic%2FEconomics&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection
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The Federal Reserve can, and will likely, move policy rates at its December meeting, barring some unexpected shock to the economy or markets stemming from the election. If the central bank doesn't act at the year's final meeting and the economy does later stumble, Yellen and her colleagues may have little choice but to pursue the far more distasteful option of negative interest rates. Simply put, the Fed really doesn't have the luxury to stand without action any longer.
ReplyDeleteSure higher interest rates will slow economic growth, but I'd rather than be the case than play with the idea of another economy. With the rising health of the economy, I would agree that we need to raise the interest rates a little bit because we don't want the economy to snowball out of control. As long as it doesn't increase too much I'll be happy since I'll probably be running to the bank for loans and such after I graduate soon.
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