Do We Have a Monetary Policy?

The Federal Reserve Left Short-Term Interest Rates Unchanged for the sixth straight time. This year looks like last year, when Fed representatives, consistently and constantly, told everyone that rates were going higher. Then in the last meeting of the year, they raised the short-term rate a paltry 0.25%. The big difference, this time, is that the vote was 7-3. The Federal Reserve Board isn’t like the Supreme Court with split decisions. The Board generally has a unanimous decision. The last time there was a dissent was in 2005.

At September’s meeting, many Fed reps commented that conditions are very good for a rate change upwards, but they wanted to wait to the last meeting of the year to see more positive economic signs.

Chairman Yellen made the statement “It just isn’t clear what is the correct policy and what exactly is going on in the economy”. That being said the governors did release some interesting data and forecasts. They expect GDP growth of just 1/8% this year and marginally higher at around 2% for 2017 and 2018. Sounds like interest rates are remaining low for a very long time! 

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