Federal Reserve Chair Janet Yellen
on Monday argued for gradual rate normalization, and called an interest
rate hike "appropriate" if central bank officials see progress toward
labor and inflation goals.
Responding to an open letter from consumer advocate Ralph Nader,
Yellen defended the Fed's accommodative policy, contending it helped
boost the job market and asset prices in the wake of the global
financial crisis. Late last month, Nader criticized near-zero interest
rates, claiming they hurt savers and burdened people on fixed incomes.
"We all hope and expect that the economy will continue to expand, that
the jobs market will continue to make progress, and that inflation will
move toward our 2 percent price stability objective," Yellen wrote. "If
that is the case, my colleagues and I have indicated it will be
appropriate to begin to normalize interest rates."
She stressed that rate hikes
will come gradually, adding that an "overly aggressive" increase would
help savers "only temporarily." Nader previously implied that the Fed
excluded savers from its policy decisions and instead focused on
pleasing the financial sector.
Traders have eyed any rate commentary from Yellen and other members of
the Fed's policy-making committee ahead of its next meeting in
December. Officials have implied they will strongly consider moving from
near-zero interest rates at the meeting.
The next clue about the employment situation will come early next month, with the release of November jobs data.
www.armstrongeconomics.com
The expedited meeting at the Fed unnerved many. While no economic policy change should be expected before the December 15-16 meeting, the Fed is clearly not in the camp of negative interest rates. They are looking to raise rates to aid pension funds and you cannot lower rates to “stimulate” the economy (although that never works anyhow) unless you raise rates first.
The Fed’s October meeting minutes, as well as speeches by various Fed officials, all clearly hinted that a December rate hike is likely to be in the works. Today’s meeting saw Janet Yellen, the Federal Reserve Chair, argued for gradual rate “normalization”, and called an interest rate hike “appropriate” provided they continue to see progress toward labor and inflation goals.
www.armstrongeconomics.com
The expedited meeting at the Fed unnerved many. While no economic policy change should be expected before the December 15-16 meeting, the Fed is clearly not in the camp of negative interest rates. They are looking to raise rates to aid pension funds and you cannot lower rates to “stimulate” the economy (although that never works anyhow) unless you raise rates first.
The Fed’s October meeting minutes, as well as speeches by various Fed officials, all clearly hinted that a December rate hike is likely to be in the works. Today’s meeting saw Janet Yellen, the Federal Reserve Chair, argued for gradual rate “normalization”, and called an interest rate hike “appropriate” provided they continue to see progress toward labor and inflation goals.
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