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Fed. May Raise Interest Rates soon
Wall Street Journal ^
| 03/25/11
| Greg Robb
Posted on 03/26/2011 8:53:56 AM PDT by PSYCHO-FREEP
By Greg Robb WASHINGTON (MarketWatch) - The Federal Reserve should hike interest rates from current range near zero to 2.5% within a year under a plan unveiled Friday by Charles Plosser, the president of the Philadelphia Federal Reserve Bank.
Plosser did not give a specific time when this exit would begin but said it would have to start in the "not-too-distant future." In a speech to economists from the monetarist school on Friday, Plosser laid out an aggressive plan where the Fed would sell $125 billion of assets for each 25 basis point increase in the funds rate.
A slower approach could last 18 months rather than a year, he said. This would require only $67 billion of conditional sales between meetings but the funds rate would rise to 3.5%. Plosser, a voting FOMC member this year, said he did not think this strategy would disrupt markets.
(Excerpt) Read more at marketwatch.com ...
TOPICS: Business/Economy
KEYWORDS: 2late; inflation; interest
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Get your marbels back in the bag. The bully is back and on the playground!
To: PSYCHO-FREEP
Rates have been too low for too long. There’s no excuse for it being this close to 0.
2
posted on
03/26/2011 8:55:41 AM PDT
by
Tolsti2
To: Tolsti2
This is probably a healthy rise - they NEED to go up, but this proposal will be slow enough as to not put too much a damper on things IMHO.
3
posted on
03/26/2011 8:58:20 AM PDT
by
RockinRight
(C'mon people - enough with the FR circular firing squad.)
To: Tolsti2
I agree. They should have raised them in 2007 and let the markets handle the economy. There would never have been a Bail-out and the economy would be booming again as well as UE would be below 6%.
4
posted on
03/26/2011 8:59:11 AM PDT
by
PSYCHO-FREEP
(Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
To: Tolsti2
We’ve been waiting for this. This is not bad news for savers.
5
posted on
03/26/2011 9:00:54 AM PDT
by
Marie Antoinette
(Proud Clinton-hater since 1998.)
To: PSYCHO-FREEP
It would’ve been a shock to the system and will now, but it’s needed badly. The fed now has no leverage at all which is awful business in the long term.
6
posted on
03/26/2011 9:02:04 AM PDT
by
Tolsti2
To: RockinRight
I see this as too late. The damage the Fed has done is beyond repair by simply raising Interest rates.
Because of that unprecedented delay, hyper inflation may start to kick in. Once it starts, the fear is that it will not stop.
7
posted on
03/26/2011 9:02:31 AM PDT
by
PSYCHO-FREEP
(Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
To: PSYCHO-FREEP
Commodities, gas prices, food, etc. are all rising. The Fed is not ahead of the curve, inflation is already here.
8
posted on
03/26/2011 9:04:37 AM PDT
by
Starboard
To: Marie Antoinette
Here again, the result may be that the Stock Market tanks once investors head for the hills and start buying CD’s again.
This will be Carter redux. The overall economy may wind up on it's back in short order.
9
posted on
03/26/2011 9:06:50 AM PDT
by
PSYCHO-FREEP
(Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
To: Starboard
It also does not help the situation that they are not including food and fuel increases into the statistic.
This alone guarantees the fact that they will never get ahead of the actual rate. The lies and misinformation will surely bite them on the end.
10
posted on
03/26/2011 9:09:33 AM PDT
by
PSYCHO-FREEP
(Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
To: Marie Antoinette
11
posted on
03/26/2011 9:11:29 AM PDT
by
al baby
(Hi Mom!!! <sarc>)
To: PSYCHO-FREEP
They've turned it into play money anyway.
12
posted on
03/26/2011 9:27:51 AM PDT
by
E. Pluribus Unum
("If they bring a knife to the fight, we bring a gun." -- Barry Soetoro, June 11, 2008)
To: PSYCHO-FREEP
This will wipe out half the business that are struggling.
13
posted on
03/26/2011 9:29:34 AM PDT
by
Fido969
To: PSYCHO-FREEP
Not a bad idea.We have to raise rates sometimes and tighten up before hyper inflation sets in.I do not think a slow gradual increase in rates will hurt business This will also give a boost to the dollar as well.
14
posted on
03/26/2011 9:38:47 AM PDT
by
chuckee
To: PSYCHO-FREEP
Raising the interest rates that the Fed Directly controls to 2.5% over a 1 year to 1.5 year range should not dampen the economy that much.
Of much greater concern is how the Fed has used the Treasury Bond market to pump liquidity into the system. Without their QE1 and QE2, US Treasuries would have higher interest rates -- which means the US debt would be much higher today. Bad news you say? No, it would highlight the debt problem and get more folks on board to resolve the problem.
15
posted on
03/26/2011 9:40:45 AM PDT
by
mlocher
(Is it time to cash in before I am taxed out?)
To: RockinRight
but this proposal will be slow enough as to not put too much a damper on things IMHO.Yes,, its hard to stop something that is not moving....
16
posted on
03/26/2011 9:50:51 AM PDT
by
MrPiper
To: PSYCHO-FREEP
Plosser, a voting FOMC member this year, said he did not think this strategy would disrupt markets. That confirms it. This strategy absolutely positively WILL disrupt markets.
17
posted on
03/26/2011 9:53:50 AM PDT
by
Hoodat
(Yet in all these things we are more than conquerors through Him who loved us. - (Rom 8:37))
To: PSYCHO-FREEP
Well that should add quite a boat load of interest expense on obama’s debt.
18
posted on
03/26/2011 10:01:20 AM PDT
by
AmusedBystander
(I'm sure that Obama loves his country, I'm just not sure which country is his.)
To: Marie Antoinette
This is not bad news for savers.
In the mid-90s, I had a money market drawing about 8%, which was moderate-low.
Two years ago, I had some 4% CDs mature. The renewal rate was 2%. When those 2%-ers matured, the renewal was 1%. I was regretting that I hadn't bought longer-term CDs when I first bought the 4%-ers. lol.
The rates have been so low for so long that they have kept cash coming into saving accounts, thus providing loan money for financial institutions.
19
posted on
03/26/2011 10:10:34 AM PDT
by
TomGuy
To: PSYCHO-FREEP
The housing market might find this to be problematic !
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