Federal Reserve Signals Higher Interest Rates are Imminent

[Frodo]

Federal Reserve decision: Fed signals that higher interest rates are coming

By Steven Mufson
March 18, 2015 at 9:22 PM

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[Ban my account ffs!]

Raising the rate by even ten basis points is going to cause a panic at this point, it seems.

[Beet]

Raising the rate by even ten basis points is going to cause a panic at this point, it seems.

It would cause a panic in emerging markets. The dollar is already absurdly strong.

[King]

It's about that time.  And if we had a competent moderate government we could even work to balance the budget for right about now, at least short term surplus for the end of the decade years. But we don't oh well.

[compson III]

Raising the rate by even ten basis points is going to cause a panic at this point, it seems.

It would cause a panic in emerging markets. The dollar is already absurdly strong.

That is exactly the point.  This is about shifting power from the periphery back to the core.

One spike in rates and EM will pop, Renminbi reserve currency dreams will crash, and the gold bugs will be stomped into the ground.

I really don't think FED anticipates all of this already but they will learn by doing.

[Frodo]

Despite initial shakiness in the economy earlier this year, Janet is sticking to her guns:

Yellen Sees Rate Rise in 2015, Gradual Tightening Thereafter

by Jeff Kearns, Jeanna Smialek, & Craig Torres
1:00 PM EDT, May 22, 2015

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[Sprouts Farmers Market ✘]

I'm so sure everyone in this thread knows so much more about monetary policy than Janet Yellen.

King is right of course. It's been a long time coming. They should be going up by quite a bit. Last month should've been the time to start, but we can wait through the summer if we really have to. There's no reason for rates to continue to be so low with the economy so strong.

[Ebsy]

People are freaking out over a rate increase? Are you all economically illiterate?

[Skill and Chance]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

[King]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Well, if Yellin plans on raising the rate to 18% this year, Congress better demand her resignation.

[Ebsy]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

So you are.

[OSR stands with Israel]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Interest rates had to be raised to astronimcal levels in 1980-1982 to kill inflation. Once inflation was killed you could lower interest rates and get the economic moving again. That's exactly what happened and guess what happened 20 years of prosperity

[Sumner 1868]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Interest rates had to be raised to astronimcal levels in 1980-1982 to kill inflation. Once inflation was killed you could lower interest rates and get the economic moving again. That's exactly what happened and guess what happened 20 years of prosperity

https://en.wikipedia.org/wiki/Early_1990s_recession

[○∙◄☻¥tπ[╪AV┼cVê└]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Interest rates had to be raised to astronimcal levels in 1980-1982 to kill inflation. Once inflation was killed you could lower interest rates and get the economic moving again. That's exactly what happened and guess what happened 20 years of prosperity

https://en.wikipedia.org/wiki/Early_1990s_recession

But the economy always does awesome when inflation is low. Like when it was booming from the deflation in the early 1930s...... Oh wait.

[OSR stands with Israel]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Interest rates had to be raised to astronimcal levels in 1980-1982 to kill inflation. Once inflation was killed you could lower interest rates and get the economic moving again. That's exactly what happened and guess what happened 20 years of prosperity

https://en.wikipedia.org/wiki/Early_1990s_recession

Compared to what we faced from 1969-1982 it was nothing. If inflation was allowed to increase the economy would never have improved in the 1980s

[OSR stands with Israel]

People are freaking out over a rate increase? Are you all economically illiterate?

1979-80.

Interest rates had to be raised to astronimcal levels in 1980-1982 to kill inflation. Once inflation was killed you could lower interest rates and get the economic moving again. That's exactly what happened and guess what happened 20 years of prosperity

https://en.wikipedia.org/wiki/Early_1990s_recession

But the economy always does awesome when inflation is low. Like when it was booming from the deflation in the early 1930s...... Oh wait.

So Inflation of over 13% and increasing was not going to make the economy worse

[jaichind]

I actually do not think the USD is too strong.  Looking at the U.S. Dollar Index(USDX) which averaging the exchange rates between the USD and  major world currencies., the current levels of this index (around 96) is for sure pretty high compared to the 2005-2013 period when it was jumping around 80.  But the current levels are about the same as 2003.  It is much lower than the 2000-2002 period when it was jumping around 115.  96 is about where it was during the 1987-1994 and 1997-2000 period.  Given the relative weakness of other advance economies and the fact some emerging economies are coming down to earth the USD is not that strong in my view.

[AggregateDemand]

I actually do not think the USD is too strong.  Looking at the U.S. Dollar Index(USDX) which averaging the exchange rates between the USD and  major world currencies., the current levels of this index (around 96) is for sure pretty high compared to the 2005-2013 period when it was jumping around 80.  But the current levels are about the same as 2003.  It is much lower than the 2000-2002 period when it was jumping around 115.  96 is about where it was during the 1987-1994 and 1997-2000 period.  Given the relative weakness of other advance economies and the fact some emerging economies are coming down to earth the USD is not that strong in my view.

USD is much too weak. If Japan and China dumped their forex, the dollar would collapse. USD should be strong enough to stand on its own, and strong dollar will actually reduce the nominal value of imports.

We just need proper labor and employment policy to make sure we don't sacrifice full employment and labor force participation as we grow the global economy with imports.