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Federal Reserve Official Suggests Interest Rate Rise Needed In The "not-too-distant Future"

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Fed's Plosser: Rate Hike May Come Sooner Than Expected

Published: Monday, 27 Jul 2009 | 4:41 PM

By: Reuters

One of the Federal Reserve's most inflation-wary officials said on Monday the U.S. central bank may have to start raising interest rates even while the unemployment rate is still high to prevent price pressures from getting out of hand.

"I think we will probably have to begin raising rates sometime in the not-too-distant future," Philadelphia Fed President Charles Plosser said in an interview published on the Wall Street Journal Web site.

That will probably occur while unemployment is still high, Plosser said. The Fed official said he expects the jobless rate — which spiked to 9.5 percent in June — to peak in late 2009 or early 2010.

Plosser, who is not a voter on the Fed's monetary policy-setting Federal Open Market Committee until 2011, has been among the most vocal of Fed officials in expressing concerns about inflation risks from the Fed's ultra-low interest rates and infusions of money into the banking system.

He said that while he isn't worried about inflation in the near term, he does see risks in late 2010 or 2011.

The Fed slashed benchmark interbank lending rates to near zero and has pumped more than $1 trillion of additional cash into the financial system to counter the financial crisis that exploded in mid-2007 and the painful recession that followed.

The Fed has acknowledged that high unemployment is likely to persist into 2011, but has pledged to hold interest rates exceptionally low for a long time, in part because the weak labor market could sap fragile consumer confidence and spoil a recovery.

Many observers worry the Fed may not be able to pull back its massive support for the economy or time its exit properly. Commenting on how the Fed might withdraw its stimulus before the economy is clearly out of danger, Plosser said, "I think we've got a tough road ahead" given the political pressures that officials are bound to face.

Plosser emphasized his conviction that inflation remains a concern by saying, "I also don't want to repeat the Great Inflation of the 1970s."

That comment appeared to be a response to Fed Chairman Ben Bernanke, who defended the central bank's aggressive steps to counter the crisis in a television interview on Sunday.

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," Bernanke said.

http://www.cnbc.com/id/32175025

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Guest Daddy Bear
a timely bluff, given the Treasury is auctioning $230 bn gov't debt this week.
"I think we will probably have to begin raising rates sometime in the not-too-distant future,"

:lol::lol:

Not for a while yet..... but it will come one day.....once they've taken the value away from you.

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Guest The Relaxation Suite

It's a concerted effort by various governments to prepare people across the West for a series of rate rises. Just this week the Australian, British and American Governments have all started briefing the press about imminent rate rises. What a coincidence.

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It's a concerted effort by various governments to prepare people across the West for a series of rate rises. Just this week the Australian, British and American Governments have all started briefing the press about imminent rate rises. What a coincidence.

link to british rate rise mention, pls?

i can vaguely recall king saying he'd not keep rates so low for longer than necessary as it is penalising the prudent (savers) but that was many months back now and before brown walloped him and stuck a red rosette on his buttocks

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It's a concerted effort by various governments to prepare people across the West for a series of rate rises. Just this week the Australian, British and American Governments have all started briefing the press about imminent rate rises. What a coincidence.

I have noticed that. Similar thing happened when they all started chat about slashing interest rates. A wee teaser to see how the public react. Same thing with the talk of QE. Now all of a sudden there is sudden chat about rates maybe rising.

I hope all those on trackers have been paying away like bastards !! May be in for a shock soon..

Or maybe it is just a ruse. Who knows.

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They have no intention at all of a rate rise, it absolutely will not happen. The plan is to threaten people with rate rises will debt is inflated away in a controlled fashion. Raising rates now would cause massive defaults. If they can't inflate in a controlled way then it will be uncontrolled but it is inevitable. So all the while expect whatever lie serves the purpose. Expectation is reality in the mind of the economist.

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Guest The Relaxation Suite
link to british rate rise mention, pls?

i can vaguely recall king saying he'd not keep rates so low for longer than necessary as it is penalising the prudent (savers) but that was many months back now and before brown walloped him and stuck a red rosette on his buttocks

Hi loginandtonic

I just searched around and found this:

http://www.bloomberg.com/apps/news?pid=206...id=a81vKxFUgKwY

So apologies because it was not the British Government that talked about UK rate rises but various bankers, etc. Having said that both US and Australian Governments have briefed about rate rises, so the British Government's failure to do so makes them at least one of the following:

1. Slower to do so

2. More dishonest

3. Totally unable to raise rates while trading partners are able to do so

Edited by D-503

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Guest spp
That comment appeared to be a response to Fed Chairman Ben Bernanke, who defended the central bank's aggressive steps to counter the crisis in a television interview on Sunday.

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," Bernanke said.

You'd better hurry up with that letter of resignation then Bernanke!

In the words of Arnie... http://gettothechopper.ytmnd.com/

(No pun intended)

:lol:

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Hi loginandtonic

I just searched around and found this:

http://www.bloomberg.com/apps/news?pid=206...id=a81vKxFUgKwY

So apologies because it was not the British Government that talked about UK rate rises but various bankers, etc. Having said that both US and Australian Governments have briefed about rate rises, so the British Government's failure to do so makes them at least one of the following:

1. Slower to do so

2. More dishonest

3. Totally unable to raise rates while trading partners are able to do so

much obliged thx, i thought it wasnt the politicians' words on that, but bankers well that's better than nothing :)

July 27 (Bloomberg) -- Bank of England Governor Mervyn King may beat Ben S. Bernanke to the emergency exit.

King, 61, will be in the vanguard of a global push to raise interest rates next year as he grapples with the highest inflation expectations in the Group of Seven industrialized nations, say economists at Goldman Sachs Group Inc. and Deutsche Bank AG...

Higher borrowing costs may further dim prospects for Prime Minister Gordon Brown, who has trailed the opposition Conservatives in opinion polls for more than a year and must call an election by June 3..

hmm a good bit more meaty than i thought, thx again D-503

Edited by loginandtonic

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You'd better hurry up with that letter of resignation then Bernanke!

:lol:

There is a growing expectation that Bernanke will be chucked out and replaced by Summers (God help us!) pretty soon anyway, so he may not need to preside over any depression. He sure as hell contributed to it though!

Good ticker on this:

Sunday, July 26. 2009

Posted by Karl Denninger in Federal Reserve at 22:54

Bernanke Dissembles; The Economy Burns

You didn't really expect Bernanke to go quietly into the night without trying to "rescue" his legacy, did you?

“The problem we have is that in a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,†Bernanke said today at a town- hall-style meeting in Kansas City, Missouri, taped for broadcast on PBS television this week. “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.â€

No Ben, the problem we have is that when you fail to do your job for the entirety of the time you have it, that is, policing the safety and soundness of the banking system, putting a stop to predatory, impossible-to-pay loans such as OptionARMs and ridicuous commercial real estate lending, blatantly false and "bought" ratings and every other manner of credit pumping, you find yourself sitting on the precipice of implosion - which you then used to justify even more idiotic credit creation and lies.

Let's face reality right here:.......................continues

http://market-ticker.org/archives/1263-Ber...nomy-Burns.html

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