Tuesday, Dec 15, 2009

Long time to wait?

Cnn: Fed will hike rates - in 2011

But leaving rates at such levels is not without significant risks.
Low rates can sow the seeds of inflation, which can eat into workers' earnings and squeeze budgets. It also has been blamed for the fall in the value of the dollar versus other major currencies, such as the euro, which in itself can limit Americans' buying power.
Beyond that there are concerns that cheap rates can feed asset bubbles. Many blame the Fed's decision to leave rates at its previous record low of 1% for 12 months from June 2003 to June 2004 as a major factor in feeding the housing bubble.

Posted by mark @ 11:59 AM (1170 views)
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1. mountain goat said...

I don't believe it's the Fed's decision ultimately. They will raise IR after the bond market does on short term Treasuries (a few weeks ago these were negative, investors paying the US government to hold its debt).

So my views are with this school of thought: http://www.elliottwave.com/freeupdates/archives/2009/08/18/Interest-Rates-Think-Central-Banks-in-Control-Think-Again.aspx

Tuesday, December 15, 2009 12:24PM Report Comment
 

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