Fed Moves Closer to Rate Hike

If one reads the FOMC's latest monetary policy statement carefully, one finds the wording reflects a somewhat stronger economy and labor market than the prior monthly statement. One also finds that rate hikes have moved closer, as the Fed is no longer looking for "further improvement in the labor market" but is now looking for "some further improvement in the labor market." In short, the Fed has continued its gradual march toward its first interest rate hike since the Financial Crisis.




June 17, 2015 FOMC Statement: FRB: Press Release--Federal Reserve issues FOMC statement--June 17, 2015

July 29, 2015 FOMC Statement: FRB: Press Release--Federal Reserve issues FOMC statement--July 29, 2015

donsutherland1 said:

If one reads the FOMC's latest monetary policy statement carefully, one finds the wording reflects a somewhat stronger economy and labor market than the prior monthly statement. One also finds that rate hikes have moved closer, as the Fed is no longer looking for "further improvement in the labor market" but is now looking for "some further improvement in the labor market." In short, the Fed has continued its gradual march toward its first interest rate hike since the Financial Crisis.

June 17, 2015 FOMC Statement: FRB: Press Release--Federal Reserve issues FOMC statement--June 17, 2015

July 29, 2015 FOMC Statement: FRB: Press Release--Federal Reserve issues FOMC statement--July 29, 2015

Click to expand...

If the BRICS keep on down and Euroland stays weak .... well, all we need then is for the stock market bubble to pop and the Fed won't have to do a thing. Only reduce rates by some and buy more bonds.

I have said it before and I will say it again - the Fed are macroeconomic ignoramuses. They helped cause the housing boom/bust by dropping rates too low and then raising them back up WAY too slowly. They were almost completely clueless about the housing crash as the Fed minutes from 2007 prove. They keep having one QE after another - seemingly convinced that each one will undoubtedly be the last.
These people are fantastic bean counters but clearly do not understand macroeconomics.

They have been yakking about raising rates for years. They said for month after month that a 6.5% U-3 was one of the targets. Well....that came and went with no rate hike and now the Fed FINALLY seem to realize that the U-3 is a lousy judge of the employment situation.

Now, these macroeconomic ding dongs think employment is improving. No...it is not...unless some very high end and TONS of very low end jobs (with little in the middle) is their idea of 'improving'. Once again, look at the by far most important age group for America...the 25-54's. In the last year, the employment to population ratio (which takes demographics into account) has dropped from 76.7% to 76.5%..which is a negative result as the higher the number, the better. So, if the U-3 is dropping but so is the employment to population ratio of the most important age range (and largest - almost 2/3'rds of all those employed are 25-54's) - then that means that the ONLY age ranges that are showing improved employment ratios are those under 25 and those over 54. Hardly the market for stellar jobs.

Table A-9. Selected employment indicators


Plus, the M2 money velocity continues to plummet. And these ridiculously low interest rates were designed to STIMULATE economic activity...not reverse it. But, as the chart shows, the M2 money velocity ratio is the lowest in over 55 years and continues to drop...hard.



https://research.stlouisfed.org/fred2/series/M2V/

If the velocity is this bad - and getting worse every 1/4 - what the heck is going to happen if the Fed starts raising rates again? Surely, they see this. But whether they are actually paying attention to it is another matter.


Finally, the equity markets are stagnating...the one truly bright spot in this 'recovery'. But the DOW is down ytd and has been basically flat since a few days after QE3 officially ended last Oct. 30...that was 9 months ago.


So, the 25-54's are getting less and less employed per capita, the Money velocity is in near free fall still and the stock market boom seems to have petered out.

NONE of these, imo, important measurements show a positive direction...they show the exact opposite. Throw in the fact that the inflation rate stubbornly refuses to budge anywhere near the Fed's 2% goal and these facts point to the obvious..the economy is stagnating. And that is with ZIRP and roughly $750 billion in deficits/Fed unofficial QE that is being pumped into the economy each year.

If the Fed wants to avoid a recession (and we all know how borderline paranoid the masses are about that), they had better not raise rates in September, imo. Unless they go up only .25% and then state that this is the last raise for a while...in which case; what is the point?


I predict they will not raise rates in September (though I would put my hunch at about 75-25) - that even the Fed sees that things are not nearly as rosy as many economists/media types are claiming...or even some of the Fed governors for that matter.

A fall interest rate hike remains on course. Inflation is "temporarily" low, partly on account of commodities price and the labor market continues to approach levels at which the Fed can hike rates. This update is based on remarks from Federal Reserve Vice Chairman Stanley Fisher and Atlanta Federal Reserve President Dennis Lockhart.

From Reuters:

U.S. inflation is only temporarily "very low" due in part to commodity prices, while the U.S. economy has nearly achieved full employment, Federal Reserve Vice Chairman Stanley Fischer said on Monday.

"A large part of the current inflation is temporary. It has to do with the decline in the price of oil; it has to do with the decline in the price of raw materials," he said on Bloomberg TV.

U.S. inflation temporarily 'very low,' says Fed's Fischer | Reuters

From Lockhart's speech before the Atlanta Press Club:

Key to my own thinking on impending policy decisions is the outlook from here. I expect somewhat stronger growth in the second half of the year. I expect the employment markets to continue to tighten. I expect continuing labor market progress to begin to put upward pressure on wages across the economy. And I expect convincing evidence to emerge that inflation is rising to a safer level and approaching our 2 percent target...

Compared to earlier in the year, we know a lot more and can shelve some concerns. We appear to be past the most acute concerns of a spillover from Europe. I have more confidence in the resilience of the economy today compared to even a few months ago. I am much less concerned about a reversal of economic fortune. We are getting closer and closer to what feels like a healed state of the economy.

For me, the cumulative evidence of the economy's healing, and the likelihood the economy is on a path to achieving the Fed's mandated objectives, makes me comfortable that the economy can handle a gradually rising interest-rate environment.

https://www.frbatlanta.org/news/speeches/2015/0810-lockhart.aspx

donsutherland1 said:

A fall interest rate hike remains on course. Inflation is "temporarily" low, partly on account of commodities price and the labor market continues to approach levels at which the Fed can hike rates. This update is based on remarks from Federal Reserve Vice Chairman Stanley Fisher and Atlanta Federal Reserve President Dennis Lockhart.

From Reuters:

U.S. inflation is only temporarily "very low" due in part to commodity prices, while the U.S. economy has nearly achieved full employment, Federal Reserve Vice Chairman Stanley Fischer said on Monday.

"A large part of the current inflation is temporary. It has to do with the decline in the price of oil; it has to do with the decline in the price of raw materials," he said on Bloomberg TV.

U.S. inflation temporarily 'very low,' says Fed's Fischer | Reuters

From Lockhart's speech before the Atlanta Press Club:

Key to my own thinking on impending policy decisions is the outlook from here. I expect somewhat stronger growth in the second half of the year. I expect the employment markets to continue to tighten. I expect continuing labor market progress to begin to put upward pressure on wages across the economy. And I expect convincing evidence to emerge that inflation is rising to a safer level and approaching our 2 percent target...

Compared to earlier in the year, we know a lot more and can shelve some concerns. We appear to be past the most acute concerns of a spillover from Europe. I have more confidence in the resilience of the economy today compared to even a few months ago. I am much less concerned about a reversal of economic fortune. We are getting closer and closer to what feels like a healed state of the economy.

For me, the cumulative evidence of the economy's healing, and the likelihood the economy is on a path to achieving the Fed's mandated objectives, makes me comfortable that the economy can handle a gradually rising interest-rate environment.

https://www.frbatlanta.org/news/speeches/2015/0810-lockhart.aspx

Click to expand...

I glanced over Lockhart's speech. I did not see him mention September specifically...whereas I think he did before.

They might raise 'em in September.

But I still do not see why (based on Fed logic).

The Yuan got devalued BIG time last night...which could signal a currency war. Employment in the 25-54's dropped yet again last month, the DOW is falling, M2 money velocity is still dropping and the Atlanta Fed's GDP Now is predicting a 1.0% GDP growth in Q3 (though that could change).
Where this sudden optimism from the Fed is from is beyond me.

This 1/4 point rate rise is turning into an obsession at the Fed...and it is starting to look irrational to me (by the Fed's standard's).

Also, with the Yuan falling, that will probably force up the dollar which will hurt exports which is not what the Doves on the Fed want.

Finally, I cannot believe the White House (who recommended Yellen and many of her Fed bunch) are ga ga for a rate rise...no matter how small.

A rate hike in September just does not make sense to me (by Fed logic).

But who knows?

Fed’s Fischer suggests September rate hike not a done deal

'Stanley Fischer, the Federal Reserve’s vice chairman, made comments on Monday that suggest the central bank will not make its first interest rate hike since the financial crisis next month.

“The interesting situation in which we are is that employment has been rising pretty fast relative to previous performance and yet inflation is very low,” Fischer said in an interview on Bloomberg TV.

“And the concern about the situation is not to move before we see inflation as well as employment returning to more normal levels,” Fischer said.'

Fed’s Fischer suggests September rate hike not a done deal - MarketWatch

'Fed Minutes Show Caution in Discussion on Rates

...The meeting account said “almost all members” of the Federal Open Market Committee “indicated that they would need to see more evidence that economic growth was sufficiently strong” to bring inflation closer to its target before they were ready to raise rates for the first time since the financial crisis.'

http://www.nytimes.com/2015/08/20/business/economy/fed-minutes-july-meeting.html?_r=0

"Fed moves closer to rate hike".

And yet they're not backing off of the QE.

How does that one work?

QE is done.
the problem now is on the fed to balance their spreadsheet and what to do with the trillions of dollars they have on the books.
inflation has been artificially suppressed due to the nature of QE. also the fact that the oil war is still going on.

even so I could se a .25% increase in the interest rate but no more.

actually what hurt in the mortgage crisis is that the feds raise interest rates like 3 times between the end of 2006 through 2007 to the tune of almost 1+%.
that is when all those people who had ARMS saw their mortgage rates adjust and they were on the bubble to begin with were now pushed over.

if the fed's do raise the interest rate you will see the dollar explode off again. given all the issues with the euro and the economic issues in Russian and China
you will see the dollar explode.

DA60 said:

I have said it before and I will say it again - the Fed are macroeconomic ignoramuses. They helped cause the housing boom/bust by dropping rates too low and then raising them back up WAY too slowly. They were almost completely clueless about the housing crash as the Fed minutes from 2007 prove. They keep having one QE after another - seemingly convinced that each one will undoubtedly be the last.
These people are fantastic bean counters but clearly do not understand macroeconomics.
They have been yakking about raising rates for years. They said for month after month that a 6.5% U-3 was one of the targets. Well....that came and went with no rate hike and now the Fed FINALLY seem to realize that the U-3 is a lousy judge of the employment situation.
Now, these macroeconomic ding dongs think employment is improving. No...it is not...unless some very high end and TONS of very low end jobs (with little in the middle) is their idea of 'improving'. Once again, look at the by far most important age group for America...the 25-54's. In the last year, the employment to population ratio (which takes demographics into account) has dropped from 76.7% to 76.5%..which is a negative result as the higher the number, the better. So, if the U-3 is dropping but so is the employment to population ratio of the most important age range (and largest - almost 2/3'rds of all those employed are 25-54's) - then that means that the ONLY age ranges that are showing improved employment ratios are those under 25 and those over 54. Hardly the market for stellar jobs.Table A-9. Selected employment indicatorsPlus, the M2 money velocity continues to plummet. And these ridiculously low interest rates were designed to STIMULATE economic activity...not reverse it. But, as the chart shows, the M2 money velocity ratio is the lowest in over 55 years and continues to drop...hard.

https://research.stlouisfed.org/fred2/series/M2V/
If the velocity is this bad - and getting worse every 1/4 - what the heck is going to happen if the Fed starts raising rates again? Surely, they see this. But whether they are actually paying attention to it is another matter.
...

Click to expand...

To be sure, each stimulus round/dollar has diminishing returns.
Of course, the first and second rounds (saving financial infrastructure/banks/brokers and all their deposits/commercial paper mkt, etc) were absolutely necessary, if you want to see any line at all, except a Vertical down one/Crash.

It's also shows a concentration of wealth that's been going on since the Reagan Tax cuts (save the 90s Net boom), as well as globalization lowering the Middle's wages, and more recent Illegal immigration invasion, the coup de grace for the Middle Class wage/Velocity engine.

One way, maybe the Only way, to inarguably increase Velocity, is raise taxes on the rich (who have all the money to 'veloce' DA60 !) and 100% earmark it for say, an infrastructure Jobs program.
Infrastructure we also inarguably need.
The money starts to turn over again.

There's just No Velocity when 1% have all the marbles/disposable income.
They've won too well (in keeping wages AND Top Marginal rates/Cap Gains low), and there's No one to buy the incremental new Computer/car/etc.
You kill your own customer with low wages (the 'Walmart syndrome')
It's a demand recession due to lack of wealth in 90% of people's hands.
Low velocity.

Not coincidentally, and in evidence, Velocity mirrors THIS chart:
(Top marginal rate) (not to mention 2003 Cap Gains/Divs/Halving)

With the stocks plunge on Friday the rate hike may be put in the closet.

rhinefire said:

With the stocks plunge on Friday the rate hike may be put in the closet.

Click to expand...

The only way I see a rate hike in September now is if the Fed comes out this week with a strong hint at QE4 - thus (probably) ending the equity carnage of the last few business days. The last time they did that, the markets skyrocketed.

After a few weeks of equity growth from this Fed hint, then they would have a more positive atmosphere in which to raise rates...that is assuming the last job report before the next FOMC meeting does not look awful.

But I agree; as it stands, a September rate hike probably is off the table (unless this equity hammering stops on it's own for some reason).

DA60 said:

Now, these macroeconomic ding dongs think employment is improving. No...it is not...unless some very high end and TONS of very low end jobs (with little in the middle) is their idea of 'improving'.

Click to expand...

Yer usual load of vague nonsense. Let's see some data to back that up.

>>Once again, look at the by far most important age group for America...the 25-54's. In the last year, the employment to population ratio (which takes demographics into account) has dropped from 76.7% to 76.5%

It's impossible to tell which lie yer expounding in this particular case. The overall civilian employment-population ratio has INCREASED over the past twelve months from 59% to 59.3%. It was never that high until Jun 1978. If you look at just the 25-54 cohort, it has INCREASED from 76.6% to 77.1%. It was never that high until Nov 1985.

>>So, if the U-3 is dropping but so is the employment to population ratio of the most important age range … then that means that …

And so if "the employment to population ratio of the most important age range" is NOT dropping, then I guess yer analysis is entirely worthless.



>>Plus, the M2 money velocity continues to plummet. … as the chart shows, the M2 money velocity ratio is the lowest in over 55 years and continues to drop...hard.

Let's look at a narrower range of that measure, one that charts the year-to-year percentage change.



Only once since Q1 2009 did it drop by more than .027 (Q3 2011). Since Q3 2009, the ratio has fallen by .216, from 1.71 to 1.494. That's a 12.6% drop over six years. It's been virtually flat in the last fifteen months, dropping by only .035, with most of that (.025) occurring in one quarter (Q4 2014).

"Continuing to plummet?" Continuing to drop hard"? Two percent a year? A total of .01 — six-tenths of one percent — in four of the past five quarters?

>>If the velocity is this bad - and getting worse every 1/4 - what the heck is going to happen …

First, what is "bad" about the velocity? You never explain that. Secondly, it is NOT "getting worse every 1/4." It went UP Q2 2014, and it was still higher in Q3 than it was in Q1.

>>So, the 25-54's are getting less and less employed per capita

That's a lie.

>>the Money velocity is in near free fall still

That too is a lie.

>>Throw in the fact that the inflation rate stubbornly refuses to budge anywhere near the Fed's 2% goal

So if inflation were higher, that would good for the economy?

>>these facts point to the obvious..the economy is stagnating.



Real GDP will continue to grow at 2-3% over the next eighteen months.

DA60 said:

I predict they will not raise rates in September (though I would put my hunch at about 75-25) - that even the Fed sees that things are not nearly as rosy as many economists/media types are claiming...or even some of the Fed governors for that matter.

Click to expand...

http://www.debatepolitics.com/econo...-rate-hike-post1064873901.html#post1064873901


I told you.



Fed Leaves Interest Rates Unchanged - Bloomberg Business

FOR THE LAST TIME...INCLUDE LINKS TO YOUR STATS/DATA SO I CAN VERIFY THEM. Others manage to do it, why can't you?

mmi said:

Yer usual load of vague nonsense. Let's see some data to back that up.

>>Once again, look at the by far most important age group for America...the 25-54's. In the last year, the employment to population ratio (which takes demographics into account) has dropped from 76.7% to 76.5%

Click to expand...

Technically, I was mistaken..but not by much.

First, you are taking seasonally adjusted...I was not.

Bureau of Labor Statistics Data

I must have taken September 2014 numbers as a base (I was using a whole different way of tabulating this which was MUCH more complicated, then I FINALLY found this chart just now...so something good did come out of your post).

Whatever, From last September until today, no change in the ratio. From last October until today...it dropped. It is also down from November, 2014 AND from April, May AND June of this year.

Plus, if you look at the chart, the ratio is nowhere near as high as it was before the Great Recession. And the ratio amongst Americans with more then a high school diploma is trending downwards, only the uneducated are seeing a meaningful growth in the ratio.



https://research.stlouisfed.org/fred2/series/LNU02327662

As for the M2 Money velocity:



https://research.stlouisfed.org/fred2/series/M2V

I think this chart says it all. Plus, you yourself have proven that it continues to fall...(imo) hard.

That's a lie.

>>the Money velocity is in near free fall still

That too is a lie.

Click to expand...

'lie
[lahy]

noun
1.
a false statement made with deliberate intent to deceive; an intentional untruth; a falsehood.'

Lie | Define Lie at Dictionary.com

The only way you can know if I lied or not would be if you had proof that I intended to deceive. Since you do not know me personally and I have not stated I intended to deceive (and I had no such intention, btw)...then - by definition - you CANNOT know if I lied or not.

And you accused me of lying three times in one post.

Where is your proof that I deliberately intended to deceive?

Jeez man, you called someone else an SOB yesterday. You call me a liar three times in one post. You seem to dis anyone who dares disagree with you. I dunno what your problems are offline, but you are taking all this WAY too seriously, imo.

Lighten up.

It's time to face it: we've become Japan. Interest rates are always going to stay at 0 and insolvent zombie banks will continue to be propped up by the Fed. The era of growth for this country is over.

phattonez said:

It's time to face it: we've become Japan. Interest rates are always going to stay at 0 and insolvent zombie banks will continue to be propped up by the Fed. The era of growth for this country is over.

Click to expand...

True, our situation is similar to Japans but that should be no surprise. Japan is and has been run by leftist ideologues for some time and so is the US currently. We can grow economically, we just need a Conservative administration who understands how to grow market driven economies.

Fenton said:

True, our situation is similar to Japans but that should be no surprise. Japan is and has been run by leftist ideologues for some time and so is the US currently. We can grow economically, we just need a Conservative administration who understands how to grow market driven economies.

Click to expand...

No conservative will be able to turn around this ship as long as trillions are being used to prop up zombie banks.

Fenton said:

True, our situation is similar to Japans but that should be no surprise. Japan is and has been run by leftist ideologues for some time and so is the US currently. We can grow economically, we just need a Conservative administration who understands how to grow market driven economies.

Click to expand...

I agree with your diagnosis but, with respect, not with your prescription.

Imo, the problem is not the federal government as much as it is the Fed...which is totally out of control (not just in America, but all over the world). They are the ones who are driving equity markets upwards 'artificially'. They are the ones that did much to start and facilitate the housing boom-bust by lowering interest rates too far for too long. They are the ones that are bailing out the banks. They are the ones that are allowing these banks to run a sort of Fed 'carry trade' so that they can make money simply dealing with the Fed, dissuading them from lending. They are the ones that are basically daring the government to run up huge deficits by having interest rates near zero AND then by buying up almost all of the government debt (bonds) when no one else wants it. They are the ones that said over and over again that 6.5% unemployment was one of the main goals for rate rises (well that has long come and gone and still rates don't budge). They are the ones that are forcing seniors to risk their retirement incomes on chancy equities because they cannot get squat from their saving's accounts. They are the one's that are encouraging Americans to go into massive debt due to the low interest rates. They are the ones that went WAY beyond their mandate to - in essence - buy up AIG when it failed.

'U.S. to Take Over AIG in $85 Billion Bailout'

'Under terms hammered out Tuesday night, the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes.'

U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up - WSJ

And now, even though outside of American shores is NOT in the Fed's mandate, they are starting to use global fears as justification of rate policy. Plus, just last night, Yellen started hinting about negative interest rates in the future - if needed.

And all of this is - more or less - COMPLETELY without any direct supervision. Th Fed can do almost anything they want.

And no major Republican candidate that I have heard has spoken seriously about drastically curtailing the Fed's powers (or eliminating them altogether).

And why would they...politicians on both sides of the aisle secretly ADORE the Fed. They take all the heat off of them. If their tactics work - the politicians can take credit for letting the Fed do what they did. And if it fails, they can blame the Fed and look innocent.

Imo, America (and the world) have stumbled onto a VERY dangerous path of letting central banks almost completely run the show (heck, the Bank of Japan are buying huge amounts of stocks...directly through ETF's).

These are groups of mostly bankers, most of whom are just over educated bean counters whom do not understand how the real world works (remember in late 2007 when the 'brilliant minds' at the Fed showed - thanks to the Fed minutes from that time - that they were UTTERLY clueless as to what was going on while America's economy was collapsing around them). These people - for the most part - DO NOT know what they doing and yet they have been given almost complete power to do almost anything.

Federal Reserve was blind to crisis in 2007

Federal Reserve was blind to crisis brewing in early 2007 - Jan. 18, 2013


It is madness and it will almost certainly end horribly.

And I do not hear any candidate from either party (outside of maybe Rand Paul - and even he is a pale imitation of his father on this) making much of a stink about it.

There really is no need for rate hikes. You only want to do that if there is an asset inflation risk. Right now most assets are being bought by a small group of people.

Mortgage Purchase apps at all time lows:

Why Mortgage Purchase Applications Are Near An All Time Low When Adjusted To Population | Logan Mohtashami

Consumption is also still down:

Understanding the CFNAI Components - dshort - Advisor Perspectives

So right now we are seeing housing prices rebound and in some cases get higher than pre-crash. Yet the new home buyers aren't there to support why this is happening. The issue seems to be speculation and flippers.

JP Hochbaum said:

There really is no need for rate hikes. You only want to do that if there is an asset inflation risk. Right now most assets are being bought by a small group of people.

Mortgage Purchase apps at all time lows:

Why Mortgage Purchase Applications Are Near An All Time Low When Adjusted To Population | Logan Mohtashami

Consumption is also still down:

Understanding the CFNAI Components - dshort - Advisor Perspectives

So right now we are seeing housing prices rebound and in some cases get higher than pre-crash. Yet the new home buyers aren't there to support why this is happening. The issue seems to be speculation and flippers.

Click to expand...

Isn't that another bubble?

austrianecon said:

Isn't that another bubble?

Click to expand...

No, it is not.

There are only two reasons to raise rates, 1) inflation is near. 2) the economy is overheating.

Neither of those conditions are occurring now, so there is no compelling reason to raise rates -- except that bankers make more money when rates are higher, which explains why bankers want rates raised.

Moreover, taking actions too early is asymmetric -- if a rate hike slows economic growth, going back to the old rates are insufficient to re-stabilize the economy. Contrarily, if the Fed does nothing and inflation starts increasing, they can merely raise rates then.

In layman's terms, one doesn't have to apply the brakes two miles before the stoplight. You can wait until you are closer.

MTAtech said:

No, it is not.

There are only two reasons to raise rates, 1) inflation is near. 2) the economy is overheating.

Neither of those conditions are occurring now, so there is no compelling reason to raise rates -- except that bankers make more money when rates are higher, which explains why bankers want rates raised.

Moreover, taking actions too early is asymmetric -- if a rate hike slows economic growth, going back to the old rates are insufficient to re-stabilize the economy. Contrarily, if the Fed does nothing and inflation starts increasing, they can merely raise rates then.

In layman's terms, one doesn't have to apply the brakes two miles before the stoplight. You can wait until you are closer.

Click to expand...

Actually, reread JP's last line.. I'll quote it to you.. I was pointing out irony here..

JP Hochbaum said:

So right now we are seeing housing prices rebound and in some cases get higher than pre-crash. Yet the new home buyers aren't there to support why this is happening. The issue seems to be speculation and flippers.

Click to expand...

From 2006-2008.. it was speculators and flippers that ran the housing market.

But other then that.. you have no CLUE.

The real reason why interest rates weren't raised goes back to Global economy.. not the US economy which the Fed set it met all the marks for interest rate hikes but cited the Global economy (not US) as the reason why they didn't hike.

DA60 said:

The only way I see a rate hike in September now is if the Fed comes out this week with a strong hint at QE4 - thus (probably) ending the equity carnage of the last few business days. The last time they did that, the markets skyrocketed.

After a few weeks of equity growth from this Fed hint, then they would have a more positive atmosphere in which to raise rates...that is assuming the last job report before the next FOMC meeting does not look awful.

But I agree; as it stands, a September rate hike probably is off the table (unless this equity hammering stops on it's own for some reason).

Click to expand...

I can't imagine why the fed would want QE4, except to stabilize the stock market. Stabilizing the stock market isn't one of it's mandates though, so I doubt that it could ever publicly use that as the reason.

phattonez said:

It's time to face it: we've become Japan.

Click to expand...

We only wish we were Japan. Their idea of a recession is 3% unemployment.

Interest rates are always going to stay at 0

Click to expand...

Money should be cheap. It can be created in almost infinite supply, at virtually no cost.

and insolvent zombie banks will continue to be propped up by the Fed. The era of growth for this country is over.

Click to expand...

I assume that those banks are no longer insolvent - QE fixed that. I have no reason to believe that we will not continue to grow at 2%-3% per year for decades.