Howard to blame for interest rate pressure wavers, Fed officials say
CLOSE The Federal Reserve Bank of San Francisco says that it is not prepared 더킹카지노to cut바카라 interest rates further. But some economists say the Fed has not given enough clues on when to cut rates. (Jan. 9) AP
The Federal Reserve’s monetary policy committee, headed by President Barack Obama, is expected to soon begin lowering its key interest rate target for a second time in three years for the first time in four years, an expected decision that analysts say will give him political cover to make the change.
The FOMC will meet Dec. 23 and 24, but it will start lowering its target later Friday on Tuesday, according to a person with knowledge of the deliberations, though that person didn’t know what the likely outcome would be.
As recently as last Tuesday, Fed policymakers were expected to keep interest rates near zero, or 0.5%, for a year, and at the beginning of next year they could expect to continue raising them without any major changes.
The FOMC is planning to continue lower rate hikes as long as unemployment remains around the 8%.
But a person familiar with Fed conversations told CNBC that this will only happen if the economy continues to improve.
FED OFFICER’S INCLUSION
The decision will set a precedent for other members of the FOMC to do the same, said James Howard of Morgan Stanley.
“It will signal the Fed that it’s OK with the situation it finds itself in, where you have the unemployment rate at 8% but you have a very small amount of slack in the economy,” Howard said. “If they had gone in one day and lowered the target to below zero in January, that would have been OK.”
The FOMC already has the authority to raise inter우리카지노est rates if it sees evidence of a “modest improvement in inflation,” which includes labor market weakness.
Howard believes that a Fed rate hike could become possible as early as early next year.
But even if the Fed makes its next rate decision in January, an interest rate cut would take longer than expected and would be less likely to spark inflation, he said. “The Fed needs to show that it is not just on pace for (Fed Chair Janet) Yellen to meet (the Fed)’s objective of reducing its long-term rate target by zero. It would not surprise me to see a rate reduction in the months ahead of the October meeting,” Howard said.