The Fed Should Wait for Clarity Before Raising Rates
I was going to write about something else, but it didn't come together like I thought it would, so I cobbled this together at the last moment:
The Fed Should Wait for Clarity Before Raising Rates: Most analysts believe that the Fed will leave interest rates unchanged when it concludes its two-day monetary policy meeting this week. Let’s hope so. Both inflation and inflationary expectations remain below the Fed’s target level of 2 percent, inflationary expectations have been falling, and the most recent employment report points to a slower job market than anticipated.
Even though recent data point to weakness in the economy, some members of the Fed seem anxious to implement the next round of rate increases, perhaps when the Fed meets again in July. This continues a pattern. Time and again the Fed has indicated that a rate increase is coming soon, perhaps at the next meeting, based upon its forecasts of the future strength of the economy. Then it has been forced to delay the increase as new data arrives indicating the economy is not as robust as expected.
Will the economy be strong enough to justify a rate increase in July, or will we see the same pattern once again? ...
Posted by Mark Thoma on Tuesday, June 14, 2016 at 07:15 AM in Economics, Monetary Policy |
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