Federal Reserve Vice Chairman Stanley Fisher told an economic forum on Friday that the Fed would likely look to interest rates hikes in June or September but that economic developments could change that, thereby declaring the impending end of an era of easy money.
“I don't think there is an emphasis on June instead of September” Mr. Fischer told a monetary policy forum in New York according to Bloomberg. “[I]t seems those two months get the main weight of probability.”
Fisher said that the interest rate hike would be data driven, according to Bloomberg News. But the data doesn’t necessarily signal an immediate need to raise rates according to contemporary monetary policy.
But it may be that the Fed understands that they have done all they can with contemporary monetary policy.
Shrewdly, Larry Kudlow signaled this last week in his column.
“Today,” wrote Kudlow, “Janet Yellen may rightly or wrongly be associated with liberal Democrats, but a key point is that she talks dovish and acts hawkish. She shut down so-called QE reserve creation, a surprise to many. And lately, the U.S. dollar has gone up while oil and commodity prices have gone down. As a result, an improving economy is trying to reach 3 percent growth.”
Trying…but, we’ll see.
While the 2Q and 3Q were decidedly better, the signs of a slowing economy are multiplying.
Consumer spending has slowed down, showing that whatever boost low energy costs gave the economy is likely over.
That’s led to the Associated Press using this headline: U.S. consumer spending, adjusted for inflation, rose in January;
To explain this lede: U.S. consumers spent less for a second consecutive month in January, but the weakness came from a big decline in gas prices.
In other words after adding in deflation or subtracting inflation, consumers still didn’t spend that much more.
It’s so bad that after backing in deflation, the economists are saying that REALLY consumer spending increased…we swear!
Said another way: The drop in gas prices that was only temporary anyway isn’t helping consumer spend that much more.
“Even though households didn’t take full advantage of their savings on gasoline in January, they still have a lot of scope to increase real consumption in the first half of the year,” said Paul Ashworth, chief U.S. economist at Capital Economics according to the Associated Press.
Okay, Paul.
Nothing like a Wall Street insider telling everyone else how great we got it.
It’s kind of like Warren Buffett telling us that GDP growth of 2 percent while population growth is 1 percent is great after he enjoyed the largest single year net worth increase in human history of $14 billion.
“Warren Buffett, Berkshire Hathaway chairman & CEO, says since the fall of 2009 the economy is improving at a modest pace,” says CNBC. “Compared to the rest of the world, the U.S. is doing very well.
We are Kings of the Crap because compared to everyone else Warren is doing very well!
King of the Crap, meet King of the Crap.
What do you say to the president’s biggest billionaire supporter after he quite literally did better than anyone else EVER in a tough economy?
“#$%^ you?
Safe to say that Warren (#HEARTS) Obama either hash-taggedly or rag-taggedly.
Fisher, emphasized the abnormality of keeping interest rates at or near zero, saying that the markets of gotten used to the expectation that interest rates will be low #4EVER!
Fisher also mentioned that the Federal Reserve was close to its full employment mandate #4REAL.
And that might be true at least statistically if not hash-taggedly. But that seems to be more a fig leaf of a number that allows the Fisher to really say that the interest rate hike would be date driven, rather than a data driven.
That means that barring very bad news on the economy the Fed is pretty much committed to raising interest rates this year.
But what do they know?
Sadly, despite everything, probably not much more than you do.
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