The Federal Reserve, for the past year, has been flirting with the idea of raising the interest rate benchmark from 0% up to .25%-.50%. Well, on December 16th, they have finally answered the wishes of finance experts everywhere. They rose rates very marginally, and are expected to continue to do so as inflation picks up.
Was this too late? In my opinion, no. I do not think the rise in interest rates was late at all. I think the Federal Reserve did the right thing and wait the interest rate hike out until it was adamantly clear that macroeconomic conditions were sufficient enough for them to do so. Although I also think the Fed's hike was also due to a credibility issue (promised rates would increase in 2015), I think that a small hike was definitely justified.
To go back through the year, we have had an unbelievable amount of volatility. The Greek debt crisis. The Chinese stock-market plunge. The Chinese yuan devaluation. Oil price drop and much more! These obstacles were all in the Fed's way to increase interest rates and these problems still exist today. While the hysteria surrounding these problems were at all time highs, the employment numbers for September and October were dismal. This caused a huge fear with investors and also the Fed that the global economic slowdown was slowly creeping into the US economy.
... Then, things started to calm down. Payroll numbers increased by an expected 200k+, global stock markets slowly got back to shape, and so on.
No doubt that the US Economy is at full employment and is ready for a small hike. Monetary policy for the past decade has remained at emergency-like policy for way to long. At about 5% unemployment and a moderate 2-3% GDP growth, an increase was fully justified.
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