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I'm assuming the Fed will not raise interest rates now.
by dataker 11y ago
I'm assuming the Fed will not raise interest rates now.
- rubiquity 11y agoIt's beginning to sound like Frank Underwood is behind all of this.
- roymurdock 11y agoI'm struggling to think of what the Fed can even do in this situation. I guess they can either 1) dig themselves deeper into a hole and issue another round of QE to inject liquidity into the markets or 2) do absolutely nothing. Though they are probably loathe to do nothing as then it would seem like they don't have a solution. Whatever happens, it will be an interesting/exciting time in non-traditional monetary policy that will generate a ton of academic papers going forward.
- rquantz 11y agoWell, at this point everyone is expecting them to raise rates, so not raising would, in effect, be doing something.
- jayess 11y agoAbout all they have left is more QE. My guess is that the next step in this bubble they've blown (along with the rest of the world's central banks) is massive deflation.
- meatysnapper 11y agoHonestly, I expected inflation for the last 6 years, but we haven't seen it. However, prices are creeping up nicely, in all the desirable places. Is that really that different?
- knowaveragejoe 11y agoI think they can safely do nothing and go along with the correction narrative, whether or not that's true.
- skylan_q 11y agoThe fed is paying interest to the banks for excess reserves they have parked at the fed. If they lower the interest rate they're paying out on the excess reserves, banks might move some of that money out of the fed and into other investments.
- AnimalMuppet 11y agoAt the moment, there's nothing that they need to do. A one-week drop of 15% in the stock market is not actually something that the Fed needs to fix.
- dataminer 11y agoNo one is going to raise interest rate right now, even if interest rate is raised in future it will be very minimal. This is the new normal, there is hardly any inflation and price of important commodities are falling off the cliff.
- gmarx 11y agoThe answer (pains me to say it) is, if anything, government spending. This was actually the answer after the financial crisis too. We have come to depend far too much on monetary stimulus relative to fiscal stimulus.
- dragonwriter 11y ago> The answer (pains me to say it) is, if anything, government spending. That's not something the Fed can do. That's something Congress can (in theory) do, but hasn't shown much interest in doing. > We have come to depend far too much on monetary stimulus relative to fiscal stimulus. I don't think anyone has a preference for monetary stimulus so much as the fact that the only place where there are sufficient people with interest in stimulus to effect anything is at the Fed, where the only lever they have is monetary stimulus.