As expected and reported on the blog last week, Fed Chair Janet Yellen and her team raised the Fed’s key interest rate by 0.25 percentage point today. While it’s the third time that the Fed has increased rates since the financial crisis, the US economy is on the move, and now, so are interest rates.
Yellen, in her remarks at the press conference today said that “[t]he simple message is the economy is doing well.» Read More
As the Fed wraps up their last of its eight 2-day meetings this year it’s likely to raise its key short-term interest rate by 0.25% or 25 basis points. So, what’s motivating the Fed to raise the rate? A number of factors are in the mix: (i) the base unemployment rate (the Department of Labor “U3 Rate”) is at its lowest since 2007, and we all remember the tail end of that boom; (ii) this year alone, the US has added approximately 2,000,000 jobs to date; (iii) with the U3 Rate at 4.6% there’s pressure building to increase wages, as employers look to add staff in a tightening employment market; and (iv) the Fed is expecting inflation to kick in during 2017. » Read More
It’s now been nine years since the Fed has raised its benchmark interest rate which has essentially been at zero for quite some time. The job market is certainly better reaching its lowest jobless rate of 5.1% since early in the recession, but the quality of jobs and workers’ pay has not increased to any meaningful level. The housing market remains sluggish, certainly on new home starts. » Read More
In her remarks to Congress this morning, Fed Chair Janet Yellen noted that while she is not overly concerned about the U.S. economy going forward, she is concerned that the U.S. housing market may be a drag on that continued recovery. She commented that while the U.S. economy was basically stagnant in the first quarter (a 0.1% annual growth rate), much of that stagnation can be attributable to the harsh winter in the U.S.» Read More
Following the Fed’s April 4th meeting, it had seemed unlikely that a possible QE3 would be engaged. Support for the monetary policy had dwindled and the economy boosting program seemed to have a sluggish future. However, following the conclusion of a two-day meeting in Washington, QE3 is not just likely, QE3 is here. Bernanke, Chairman of the Federal Reserve, announced today that they will be extending “operation twist” by twisting $267 billion worth of short term bonds into long-term bonds. » Read More