Federal Reserve Chair Janet Yellen
Federal Reserve Chairman Janet Yellen suggested rate hikes could be in the works for June, but board members and Wall Street insiders say that’s not likely – that the supposed moderate growth of the economy means interest rates will stay the same level they’ve been at since December.
And at least one economist said rates are being kept artificially low in response to market pressures.
The Federal Open Market Committee concluded from its recent meeting: “Economic activity appears to have slowed. Growth in household spending has moderated, although households’ real income has risen at a solid rate and consumer sentiment remains high.”
But what that means in terms of the future of U.S. interest rates level is the big mystery.
Yellen expressed an openness to consider rate hikes in June, when the committee next meets, the New York Post reported. But financial analysts said the opposite – that there is slim-to-no chance of that hike actually occurring.
“There is nothing ‘moderate’ about the economy at this moment,” said Lindsey Piegza, a chief economist at Stifel Nicolaus, explaining to the New York Post the economy is slower than reported.
And as CNBC reported, the committee failed to issue its usual “balance of risks” with its economic report – a clear sign that members not only understood the current true conditions of the economy as slow, but were trying to downplay the less-than-stellar economic realities. Atanta’s Fed, for instance, reported economic growth as slowing to 0.6 percent in the first quarter of 2016. But putting that figure in context of what it meant for the U.S. economy as a whole was largely missing from the committee’s reporting, because members didn’t include their “balance of risks” assessment.
“That tells me June 9 [for a rate hike] is effectively off the table,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank, in CNBC. “They did not do enough – they have to put that statement back in for them to hike rates.”
LaVorgna also suggested the slight uptick in stocks that followed the release of the committee’s statement would serve as more pressure on the Feds to keep rates low.
“They’re responding to market conditions,” he said, referring to the Fed, CNBC reported. “It’s [making] it harder for them to take rates to where they should be. The rate should be higher but the Fed is having a hard time getting it where most economists say they already should be.”
Another issue that could keep rates artificially low for the near future?
“The U.S. election,” the New York Post’s Kevin Dugan reported. “The central bank has historically shied away from moving rates during election years.”
from PropagandaGuard https://propagandaguard.wordpress.com/2016/04/28/federal-reserve-plays-mysterious-on-rate-hikes/
from WordPress https://toddmsiebert.wordpress.com/2016/04/28/federal-reserve-plays-mysterious-on-rate-hikes/
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