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Showing blog posts tagged with Federal Reserve

The Federal Reserve Raising Interest Rates is Unwelcome and Unnecessary

The Federal Reserve Raising Interest Rates is Unwelcome and Unnecessary

Wednesday’s decision by the Federal Reserve to raise interest rates is unwelcome and unnecessary. As admitted in its statement, investment remains soft, growth is only moderate and inflation expectations are little changed. Moreover, the economy confronts financial headwinds from the recent jump in long-term interest rates and an even stronger dollar.

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Trying to Teach Old Dogs New Tricks

On Wednesday, the Federal Reserve's open market committee concluded its two-day meeting to set U.S. monetary policy. In a vote that divided the Board of Governors, appointed by the president and confirmed by the U.S. Senate in an open public process, and the presidents of the regional bank board presidents, chosen by boards dominated by banks within their region, Janet Yellen, chair of the Federal Reserve Board of Governors and the FOMC, announced the FOMC decided to hold steady to its current fed funds rate. The fed funds rate is an overnight interest charge made between banks loaning reserves to each other. If it is higher, the cost of making loans goes up, and that reduces liquidity for the business and consumer sectors. Lower liquidity means less borrowing for business investment or consumer purchases like homes and cars. In turn, that means slower demand, and translates into slower growth for jobs.

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The Federal Reserve and Black Unemployment

The Federal Reserve and Black Unemployment

The Federal Reserve Open Market Committee (FOMC) that determines U.S. monetary policy met in July.  Its job is to weigh the state of the American economy, both the labor market and inflationary pressures to set policy.  In an interesting note, its discussion of the labor market explicitly noted the condition of the African American and Hispanic unemployment rates.  More than just an aside, reflecting on the status of June’s labor market the minutes of the meeting show the following note:

“The unemployment rates for African Americans and for Hispanics stayed above the rate for whites, al­though the differentials in jobless rates across the different groups were similar to those before the most recent recession.”

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Making the Same Mistake Twice: Why the Fed Shouldn’t Raise Rates

Image via Wikimedia.

Many are convinced that the November Employment Report from the Bureau of Labor Statistics was positive enough to finally give the Federal Reserve Open Market Committee (FOMC) the room to raise interest rates.  The report extended the record straight months of job gains, and because the numbers for the previous months were adjusted upward, the report made the last two months more positive.

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Why Inequality Matters to the Fed

Photo courtesy Thomas Hawk on Flickr

The world’s mainstream consensus has become that inequality is a problem facing nations, from the think tank of the advanced democracies—the Organization for Economic Cooperation and Development (OECD); the important agents for funding global development—the International Monetary Fund (IMF); to the world’s private economic elites—the World Economic Forum. Conservatives wish to push back against this consensus, in hopes of reviving a view that only growth matters. Of course, such a view is obviously wrong for three important reasons.

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Desperately Reading the Fed

Desperately Reading the Fed

There has been some desperate hunting last week for getting a sense of the Federal Open Market Committee’s view on whether the Federal Reserve would make a move to raise interest rates—to return to “normal.”  On Monday, Federal Reserve Governor Lael Brainard suggested she did not see a need for a timetable to raise the rate this year and, instead, that policy changes should continue to be on the basis of the data at hand.  Actually, while this was treated as new, and some suggested she “rarely speaks publicly,”Governor Brainard said very similar things back in June.  She was followed the next day with comments on CNBC from Federal Reserve Governor Daniel Tarullo, who was suggesting a similar sentiment.

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Why the Fed Is Not Close to Achieving Full Employment and Shouldn't Be Discussing Raising Interest Rates: The Case of Young Workers

Labor Day is soon. And while it is a day to celebrate the history and contributions of America’s working people in building our nation, it also marks a return to school for students. And, it is a time to reflect on those seniors, in high school and college, starting their final year before joining America’s labor market.

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Why the Fed Isn't Close to Achieving Full Employment and Shouldn’t Be Discussing Raising Interest Rates—The Case of Women

Why the Fed Isn't Close to Achieving Full Employment and Shouldn’t Be Discussing Raising Interest Rates—The Case of Women

The Federal Reserve Board’s Open Market Committee will be meeting in September. The Wall Street gamblers have been egging the Fed to change its current course and to start raising interest rates. Speculators have been trying to see if they can urge the Fed to “return to normal” with more interest rate movements at play. In part this will add another gaming table to play on, but some of them have been holding their positions in the invisible derivative markets on when interest rates will move again as the Fed unwinds its current high holdings of Treasury notes in reserve. They try to make arguments sounding as if they care about the state of the economy by conjuring the inflation boogey monster. With continued low and falling oil prices and stagnant real wages, they have instead begun to argue that interest rates need to go up, because it is only inevitable that at some time they must go up.

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