It has been sometime since the fed declared that they will be raining interest rates as the economy has started to show signs of recovery, however the question is when to. Since 2008, interest rtes have been near 0% and it’s finally okay to raise them. The Fed however has ‘competing priorities’, keeping an eye on inflation and maximizing employment in the economy. The main variable is the labor market and the fed has vowed to increase inflation rates after there’s “further improvement.” Wage growth has been slow which is the primary concern. My prediction is early 2016. What do you think?
5 comments:
Janet Yellen, the chair of the Fed has been going back and forth over the last few months regarding whether or not we will experience an increase in interest rates this coming summer. However, due to ever changing economic situations I am not sure we will see an increase or not. I think a range from Fall 2015 to Early 2016 is not a bad guess as to when the increase will occur. However, I do not want to completely rule out this summer as the Fed itself has not rule out this period.
I think the reason the Fed keeps going back and forth is because they’re itching to make the move but want to be absolutely certain they do not raise them too soon before the economy is ready. Households have been growing very impatient with the near uselessness of trying to invest to receive a return on savings and grow their income. Those saving for retirement are also worried. The Fed just wants to make sure they do not damage what has been accomplished coming out of the recession.
I agree with Kevin, the Fed wants to make sure they are making the right decision by raising interest rates. They are in a tough predicament because while the low interest rates have helped the U.S. climb out of the recession, they cannot stay low forever. The question is when is the right time to raise them. Do they take a chance and raise them in the summer or continue to wait?
Connor's point about Yellen is a good one. I think the recent increase in consumer confidence mentioned in a few of the other posts might be the final kick the Fed needs to make a decision, though.
I predict that late 2016 will be the time to raise rates due to the stability factor but considering how many people are struggling with their subpar wage I hope that there will be a change sooner.
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