Federal Reserve Sees No Need to Raise Interest Rates Soon

November 10, 2009 by · Leave a Comment
Filed under: Credit News 

Until we see the government support of the economy withdrawn and the economy shows it can operate normally without that intervention, we will not see rates raising anytime soon.

The Fed does not see inflation as a threat at this point as well.  The stock market is rising rapidly and with the amount of money and credit that has been pumped into the market with low interest rates, it is not surprise we are seeing these increases.   The test will be, can these companies make their earnings and conduct their normal financing operations is the normal regulated private market.

Two top U.S. Federal Reserve officials said there is no imminent pressure on the central bank to raise interest rates, but added that high unemployment alone isn’t enough to justify a zero-rate policy in the long term.

Answering a question from a reporter after delivering a speech at the Atlanta chapter of the Urban Land Institute, Federal Reserve Bank of Atlanta President Dennis Lockhart said there were “certainly scenarios” in which unemployment “would be at frustratingly high levels” and yet other conditions would compel the Fed to raise rates. “I wouldn’t focus on employment or unemployment alone,” he added.

In separate remarks to the Phoenix Chapter of Lambda Alpha International in Phoenix, Ariz., Janet Yellen, the president of the San Francisco Federal Reserve Bank, said that the decision to move towards a higher-rate environment, when it occurred, would be based on a complex interplay of factors or which unemployment was one.

However, Ms. Yellen said, the current consensus among Fed officials was that unemployment would likely remain high for several years. Due to this and an absence of other indicators of inflation, she didn’t see any immediate end to the Fed’s low-interest-rate environment.

Source: Wall Street Journal

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