Posted on 03/17/2017 9:51:15 AM PDT by xzins
In the past 10 years there have been only three Fed Funds rate increases. Two of those increases have occurred since President Trump won the election on November 8th, 2016.
No Fed Funds Rate increases took place between June 2006 and December 2015. CNBC reported in December 2015 that President Obama oversaw “seven years of the most accommodative monetary policy in U.S. history” (from the Fed). Finally, in December 2015 after the Fed announced its first increase in the Fed Funds rate during the Obama Presidency, it was reported that:
Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic conditions, the committee decided to raise the target range for the federal funds rate to ¼ to ½ percent,” the FOMC’s post-meeting statement said. “The stance of monetary policy remains accommodative after this increase, thereby supporting further improvements in labor Premarket conditions and a return to 2 percent inflation.”
The only other Fed Funds Rate increases since 2016 were after President Trump was elected President. The Fed Funds Rate increased on December 14, 2016 and again a couple days ago on March 15th, 2017 by .25%.
The Fed Funds Rate greatly impacts the economy:
Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder.
So the question is whether the Fed is trying to negatively impact President Trump’s economic recovery from the abysmal Obama years (Obama was the only President where the GDP growth rate never broke 3%) or is the economy just so much better now that President Trump has taken office?
We suspect both.
President Obama’s policies were so horrible that the historically low Fed Funds Interest rate was needed to keep the economy alive. Also, President Trump’s policies of lower taxes, repealing and replacing Obamacare and slashing regulations all will lead to economic prosperity for the United States.
“Another reason to abolish the FED.”
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would be nice, but we’d have to pony up our debt.
The Fed is a private firm, it is not a branch of our government.
http://www.save-a-patriot.org/files/view/whofed.html
I see it as a sign that the Trump economy is for real. Not smoke and mirrors like we saw with Obama.
Morici saw it as political.
There is great discussion over the validity of the jobs created during the Obama years and of the real unemployment rate given the labor participation rate.
I agree. The super low rates were a reflection of a struggling economy, in which you try to stimulate spending (by making money easier to borrow). When rates rise, it encourages more savings and investment.
Liberals want and need to tank the economy, otherwise they are toast in 2018, 2020, and beyond. This is being done with that intent in mind.
I think that between the rise in stocks and the interest rates on fixed income investments, many baby boomers that were holding off on retirement will now exit the job market.
This will make room for more jobs and increased inflation.
The left knows that he’s against everything they believe to be sacred, while also knowing he can’t be bought or, seemingly, brought down with political mud. It terrifies them. It’s so unhinged to the point of remarkable. The thing is, it only plays into Trump’s hands. They look like idiots but are too stupid to realize it.
“The price of food nearly doubled during Obama.”
No kidding, but the news fakers never reported that issue.
Small salad, JR cheeseburger and a large tea st Wendy’s just cost me $6.36.
I could buy the same lunch for less than $4.00 before the error of Obummer.
There should be no Fed Funds Rat or Fed.
More than one quarter point per quarter gives her the chance to raise it 3 more times for a total of 3/4 of a point.
The reality is that without a natural increase in the interest rates, there will be no real recovery. An increase probably will trigger a recession, but, if the funds rate is not rejiggered in response, and if TBTF failures are allowed to fail and let the market clean up the detritus, tha recession will be just that, a recession that will last a couple of quarters and, if accompanied by massive deregulation and detaxification, a sharp and sustained expansion. Reagan did all of that and that is what resulted.
We can only dream.
I concur.
RE: “Liberals want and need to tank the economy, otherwise they are toast in 2018, 2020, and beyond.
This is being done with that intent in mind.”
I concur.
The economy will be severely sabotaged by elites and MSM will ensure resulting pain will effectively blamed on Trump / conservatives / populists in the US & EU.
The goal is to sully Trump & conservatism for generations to come, akin to how the left scapegoated Hoover and Republicans for the Great Depression.
Brandon Smith has been right on with his predictions:
That’s one person.
The jobs created under obama was low wage and part time jobs. The economy seeks equilibrium. Obama never did anything to stop the flow of jobs out of the country. So the economy was up against a sisyphean task.
I don’t believe the unemployment numbers either. I suspect the Trump admin will reevaluate the process and restate numbers.
But the new jobs numbers are in line with prior methods.
The series of job announcements following Trump’s elections indicates that companies have gotten the message and do realize a tariff is coming.
The Fed is reacting to both positive jobs information and signs of inflation, as it should.
I think they could keep it low longer and risk more inflation to drive employment higher. But the real policy change that needs to occur to help employment is the tariff. Low interest rates is a bandaid. The real cause of the high unemployment is that we removed the tariffs.
As I understand it, the Fed usually only raises interest rates when the economy is doing well and the Trump Bump on the economy has been substantial and will likely continue.
On the other hand, we very much need to get away from the ZIRP, funny money policy that has infected this country (and the world) for almost a decade.
People and companies should be able to earn more than a pittance on their cash-based investments. Not everyone wants to bet it all in the equities casino.
I'm completely in favor of phasing in a return to 4-5 percent rates.
I think both unemployment and inflation are understated by the current methods.
What happens to an economy with real unemployment and middle class inflation when interest rates are arbitrarily raised?
My guess is that it will kill housing, in particular. Other large purchases would be harder, too, so it would impact the auto industry.
So, are you saying that we now have full employment after only 3 months of Trump, and years of lying about the actual unemployment figures by Obama?
This is entirely political.There are no signs whatsoever that the economy is "overheating".
It will hurt housing and anything needing to be financed.
But keep in mind, rates are at historic lows and this is a 0.25% increase. It’s not a wrecking ball.
The Fed is making a judgement call and the market has been expecting this. If they were trying to kill the economy, they would have been more aggressive.
It will hurt housing and anything needing to be financed.
But keep in mind, rates are at historic lows and this is a 0.25% increase. It’s not a wrecking ball.
The Fed is making a judgement call and the market has been expecting this. If they were trying to kill the economy, they would have been more aggressive.
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