Wednesday, March 18, 2015

Federal Reserve modifies stance on low interest rates

Federal Reserve

Since the Financial crisis in 2008, the Federal Reserve has kept the interest rate “at a record low of 0%”.  Officials have been waiting for the economic growth of the US economy to grow at a steady rate before thinking about raising interest rates.

The Federal reserve has changed their statement in regards to their stance on lower interest rates by removing the word "patient". Janet Yellen, the Chair of the Federal Reserve, said in a press conference that she does not want to rule out the possibility of an interest increase but the committee will decide as more information comes in. But removing the word "patient" does not mean they intend on pushing and being impatient.

Some economist feel that the interest rate increase should be pushed back even more due to a recent data that has shown things “such as lower retail sales and consumer sentiment”.

These low interest rates were meant to promote borrowing and spending to boost the economy, do you feel that our economy has stabilized to the point where a interest rate increase is due? If not when or what circumstances would be ideal before increasing interest rates?

1 comment:

Jordan Kranzler said...

I would agree with the economists in the article who believe that the delay is prudent. I would also agree with them that the Fed should wait until the economic markers it used -- "lower retail sales and consumer sentiment" -- become more promising. You would want to wait until consumer confidence/spending grows until you raise the rates in order to prevent spending/investment slowdowns that could be harmful to the economy.