So clearly they won’t increase rates. With the exception of Fisher, the rest are the byproduct of the last decade’s easy money mindset. What a shame…
No way will the Fed raise rates before a Presidential election. The banking system is weak, consumers are nervous, and many mortgages still have adjustable rates. Stay the course is the order of the day — and the all the days before the election.
NO WAY.
What the Fed SHOULD do and what the Fed WILL do are two different matters.
Real inflation is around 10% but falling fast. Thus, Fed Funds SHOULD be at 8%.
However, many, many banks are weak. Therefore, I can forecast the Fed actually LOWERING the FF before the election, to 1.5%, depending on the severity of the number of bank failures/capital requirements.
The Fed doesn’t care about the price of beef in IA, nor do they care about the price of gasoline in Washington, DC. They acknowledge that the high price of gasoline will curtail future inflation expectations because unions currently have diminished salary power.
Currently the price of gasoline has come down as people cut back on travel (as some already have the first six months of the year) and non-necessity expenditures. If the Middle East remains relatively calm (by their standards), little or no natural disaster damage (such as another Katrina, God forbid)from hurricanes, fuel costs SHOULD settle from $80-$100. Interest rates should therefore remain where they are or drop slightly.
Ironically, if the Dems control the two branches of power after November, and unions gain more sway, that might cause the Fed to raise rates in December.
They should, but they wont. They will continue to keep our dollar in the dumper so that our exports are more attractive to foreign buyers. Since no one at home is spending any money, we need to sell our goods to all the nations that are sitting much better than us. If we would raise interest rates, my dollar might be worth something, and I would be more willing to spend it. But I, like most of the US right now, am trying to save my pennies and ride this thing out.
The Feds will do, basically, whatever Wall Street wants them to do. When Wall Street gives the green light- the rates will go up. Right now is not the time to be saving for a rainy day that should have been done when thing were going good. Right now everyone is trying to dig themselves out of the holes caused by their lack of understanding in the markets or just plain laziness and greed, with guess whose money? Government money, your money, my money, but really Wall Street’s personal piggy bank. My only prayer is the prayer of a pawn.
I’d raise interest rates to 10% immediately. I would like to see people with a great deal of irresponsible debt become homeless. If the entire economy came crashing down, I would not care. Maybe people would be more careful next time. Consequences. There needs to be consequences. This country is like a bunch of overly-medicated zombie children running around on a rubberized playground.
Fed will hold ‘em until at least after the election, due to the low core PCE rate and the soft economy, not politics. Also, we have a nice, smooth, upwardly-sloping yield curve. A case could be made for keeping the Fed rate at or above the core PCE rate to avoid lending money below cost.
The Fed definitely should raise interest rates, but probably won’t because they never seem to do what is best for the country- they have another agenda.
Not a chance.
Although I agree that the effect on politics shouldn’t effect their decision, I don’t know anyone who thinks it wont anyway.
Because, no matter how true it might be that raising rates would actually be better for Wall Street and the economy at large, there will probably be an initial negative reaction on Wall Street. And since the last meeting before the election is only a week before, the Street would/could still be in the throws of that reaction on election day. Something no one, Republicrat or Demogliton, wants.
Read my Bernanke lips: NO.
On the other hand, a good 50 basis point shock & awe rise WOULD shock & awe the U.S. GreenBack skyward.
That would cause oil’s per barrel price (denominated in U.S. dollars) to plummet.
Not a bad little political gift to the Republicans.
And it would give the FED the “look & feel” of independence from the politicos… mind you, JUST the look & feel… just once, just once…
Johnny Dangerously
“Danger is not my middle name, it’s my family name.”