Sixty-Four percent of the economists surveyed say that the Federal Reserve's December 15th and 16th meeting will lead to an interest rate rise. “The Federal Reserve has all-but-telegraphed a desire to begin raising rates by year’s end, and this is likely to be at their December meeting,” said Chad Moutray, the chief economist for the National Association of Manufacturers. In September, 84% of the economists said that the Federal Reserve would increase the interest rate, but global economic slowdown and the stock market tumbling were reasons not to do this. Janet Yellen stated that to achieve the United States economic goals, t he interest rate will need to be raised. On the other hand, other economists believe that there is much less of a chance that the Fed will increase the interest rate this year because of continuing low inflation. Diane Swonk, the chief economist of Mesirow Financial thinks that there is a 50-50 chance that the Fed will raise interest rates in December. The Fed is also looking at the labor market as an indicator of when to raise the interest rate. The Federal Reserve saw the weakest back to back job growth in August and September, which was also cause fort he delay in the rate rise. Sean Snaith, an economist at the University of Florida, says that data will not justify a move until March. When do you guys think the Fed will raise the interest rates?
http://www.wsj.com/articles/wsj-survey-economists-still-see-fed-rate-increase-in-2015-1444312800
4 comments:
With everyone being hung up on what is happening in China, in combination with the fact that the FED has been saying since about April that they were going to raise interest rates at a certain date and then continuing to push back that date, it seems like it will probably be sometime in 2016 if it ever happens. The point of raising interest rates is to encourage savings, while announcing that they perceive them going up is to entice consumers to spend now before they have to start saving. Seeing as how the holiday season is coming around, I don't think rates are going to go up before December.
I also think that interest rates will probably go up early 2016. Raising them after the holiday season will encourage savings, after months of high consumer confidence in 2015. High savings will direct high investments, and thereby allowing the economy to move in the right direction.
The Fed should not raise interest rates anytime soon because the U.S. stock market is at the point of correcting itself. Also, there has been concerns about liquidity and unemployment, so they should wait, probably until the beginning of 2016, as Akram suggested. However, this raise should rather be a modest increase to avoid any drastic crisis.
I also agree that the Fed would be best suited to delay the increase in interest rates until early 2016 due to the fact that there is still substantial economic instability. Janet Yellen stated in her testimony that we must wait until certain factors in the market are stable enough to endure the raise in interest rates. Also, not much time has passed since the Fed decided not to raise the interest rates in September. The global market needs to have a better standing, as well as domestic factors such as substantial job growth. It's also a good idea to delay the interest rate change until after the holidays because it will incentive consumer saving after an extreme season of consumption.
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