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Analysts: Fed To Start Hiking Rates Before End Of 2009

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Fed to Hike Rates to 7% by Mid-2011: Strategist

Published: Tuesday, 11 Aug 2009 | 1:32 PM ET Text Size By: JeeYeon Park

Federal Reserve policymakers kicked off the two-day meeting to determine the U.S. interest rate policy. John Lekas, CEO and portfolio manager of Leader Capital, and Michelle Girard, senior economist at RBS, weighed in on what investors should expect from this week’s decision.

“We’re most focused on the Treasury-buying program,†Girard told CNBC.

“There’s not going to be any meaningful expansion of the program. The Fed is moving toward winding down the balance sheet, not stepping up. So if they say anything, it will be just a signal that the program is in the process of being wound down.â€

Girard said she doesn’t expect the Fed to start raising interest rates until the middle of 2010.

“We think we’ll be at 5 percent by the end of 2010 and continuing higher into 2011,†she said. “The Fed is going to be very cautious to make sure the economy is on solid footing before they hike.â€

In the meantime, Lekas said the Fed would have already begun to raise interest rates if it weren’t for Bernanke’s tenuous position re being reappointed.

“We do think they’ll signal that they’d like to raise and probably begin so toward the end of this year,†said Lekas.

“We think the Fed will take [interest rates] to almost 7 percent by the second quarter of 2011. That’s based on weak GDP and continuing deterioration of the dollar, which is inflationary.â€

http://www.cnbc.com/id/32372518

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CNBC sure does pick the funniest analysts. How quickly they forget what happened with rates of 5% and the now think that 7% won't crash things into a depression?

Presumably the commentator has some sort of VI for high rates.

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Guest Daddy Bear
“We think the Fed will take [interest rates] to almost 7 percent by the second quarter of 2011".

:lol:

OMG - Where dop they get these people from - if the fed raises rates to 7% by 2011 we are guaranteed a hyperinflationary depression.

In fact are guaranteed a hyperinflationary depression no matter what.

:lol::lol:

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:lol::lol::lol::lol::lol:

Unless the fed tackles the debt mountain this won't happen as we'll all be back at square one again.

7% will send huge numbers of US mortgages into default.

So the the people who lived in a house for a period of time and had no hope of ever owing the property over the long term now no longer live in it....so the monthly payments they were paying you could basically call rent.

So what do they do they hand the keys back and rent another property...think about it many of the people that signed a legal deed should and could only realistically have only signed a tenancy agreement...they were lied to and deceived into believing they could own a property they were pawns paying the price for others greed bonuses and commission of others.

They have not lost they only lived an unobtainable false dream...the government have printed the money to cover the deficit. ;)

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So the the people who lived in a house for a period of time and had no hope of ever owing the property over the long term now no longer live in it....so the monthly payments they were paying you could basically call rent.

So what do they do they hand the keys back and rent another property...think about it many of the people that signed a legal deed should and could only realistically have only signed a tenancy agreement...they were lied to and deceived into believing they could own a property they were pawns paying the price for others greed bonuses and commission of others.

They have not lost they only lived an unobtainable false dream...the government have printed the money to cover the deficit. ;)

I was more thinking about prime rather than sub.

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Guest Daddy Bear
:lol:

OMG - Where dop they get these people from - if the fed raises rates to 7% by 2011 we are guaranteed a hyperinflationary depression.

In fact are guaranteed a hyperinflationary depression no matter what.

:lol::lol:

Ben Bernanke cannot in 2009/10 raise interest rates. Conditions of high unemployment, negative GDP growth, and low inflation in the middle of the current US economic recession make it a no brainer

They are caught between a rock and a hard place.

The fact that the U.S. owes its foreign debt in dollars only limits the extent and speed of the economic crisis that is coming. Counter intuitively, if monetary and fiscal policy today allowed the money supply to fall, and demand and economic output to decline further, and CPI inflation to fall below 2% or so, a debt and currency crisis for the U.S. is virtually assured.

If Bernanke raises interest rates and cutting the money supply, he�'d launch a process to send the U.S. economy into a hyperinflation due to this monetary feedback loop.

All they can do is leave IR's at 0% or therabouts and keep printing. This will launch the US economy into hyperinflation.

Either way they are stuffed.

It' not like 1980.

DB

That's the way I see it anyway - but then I am an idiot troll.......

:D

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I was more thinking about prime rather than sub.

That is why prime or sub it is important to average a 7% rate over 25 years....you need to factor in an increase...nothing good ever stays the same. ;)

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No, you are CGNAO's lovechild.. :P

People who forecast 5% or more interest rates are completely out of touch with reality (ie stinking filthy rich).

The reason I say this is that if they were a "normal" person they would realise that this kind of rate would bankrupt them, their family and all their friends.

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Ben Bernanke cannot in 2009/10 raise interest rates. Conditions of high unemployment, negative GDP growth, and low inflation in the middle of the current US economic recession make it a no brainer

They are caught between a rock and a hard place.

The fact that the U.S. owes its foreign debt in dollars only limits the extent and speed of the economic crisis that is coming. Counter intuitively, if monetary and fiscal policy today allowed the money supply to fall, and demand and economic output to decline further, and CPI inflation to fall below 2% or so, a debt and currency crisis for the U.S. is virtually assured.

If Bernanke raises interest rates and cutting the money supply, he�'d launch a process to send the U.S. economy into a hyperinflation due to this monetary feedback loop.

All they can do is leave IR's at 0% or therabouts and keep printing. This will launch the US economy into hyperinflation.

Either way they are stuffed.

It' not like 1980.

DB

That's the way I see it anyway - but then I am an idiot troll.......

:D

I think you mean Larry Summers. I don't see Bernanke being kept on.

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Guest Daddy Bear
I think you mean Larry Summers. I don't see Bernanke being kept on.
I don't see Bernanke being kept on.

Are you mad man ?

100% guaranteed he will be kept on

Obama won't let him go. The message it would send to the markets would be bad...v bad. After all he is the "academic who studied the depression" and has rescued the U.s economy so far :lol:

Jan 31st is the change date - I will become an ardent deflationist if he is removed. :lol::lol: and post continuously about how I was so wrong regarding an inflationary future and currency crisis!

It will not happen. You do not replace your battlefield commanders during the middle of a war - no matter how sh1t they are - ends out the wrong message.

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Are you mad man ?

100% guaranteed he will be kept on

Obama won't let him go. The message it would send to the markets would be bad...v bad. After all he is the "academic who studied the depression" and has rescued the U.s economy so far :lol:

Jan 31st is the change date - I will become an ardent deflationist if he is removed. :lol::lol: and post continuously about how I was so wrong regarding an inflationary future and currency crisis!

It will not happen. You do not replace your battlefield commanders during the middle of a war - no matter how sh1t they are - ends out the wrong message.

Fair enough, but I think it will be Summers.

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Guest Daddy Bear
Fair enough, but I think it will be Summers.

Why?

Because it will all (us economy) go to ratchet before the decision is made and they will look for a fall guy?

What is your thinking?

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Why?

Because it will all (us economy) go to ratchet before the decision is made and they will look for a fall guy?

What is your thinking?

Obama was supposed to have made the decision by now and he's stalling for some reason. Summers seems to have an awful lot of clout with Obama and I think he wants Summers in there, but he's afraid to pull the trigger on Bernanke because it will spook the market.

If he really wanted Bernanke, he would have made the decision by now IMO. It's probably 50/50.

(Summers is a **** btw).

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