Washington Budget Chaos Keeps Fed Rates Low for Longer
As long as they keep these rates they will keep the stimulus too. The printing continues
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Three years from now, Federal Reserve forecasters expect the economy will still be struggling to overcome one of the biggest obstacles to growth: U.S. fiscal policy.
Most Fed officials last month predicted drag from fiscal restraint, a slow recovery in housing markets, and tight credit would cause them to hold the benchmark lending rate at 2 percent or lower until the end of 2016 to support growth and job creation.
“It is harder to get to full employment when you are in fiscal chaos,” said Allen Sinai, chief executive officer at Decision Economics Inc. in New York. “They have to be easier longer. It makes them look like they are slaves to fiscal craziness.”
Policy makers’ interest-rate forecasts showed they were building long-term fiscal dysfunction into their outlook even before the partial federal government shutdown and impasse over raising the debt ceiling. Now, the wrangling in Washington is also pushing back the timeline for a reduction in bond purchases that would precede any increase in interest rates.
The shutdown has interrupted the flow of government data the Fed uses to evaluate the health of the economy, from factory orders to trade and unemployment. It also threatens to curtail economic growth after as many as 800,000 government workers were furloughed.
read more ...