The Federal Reserve met last week and the market watched closely for changes to their policy wording about the perceived timeline for an increase in interest rates. In the end the Fed didn’t alter their policy which stated that policy would remain loose for a “considerable time” after it’s bond buying program ends in October. Fed chair, Janet Yellen, previously indicated, with many caveats that “considerable time” was about 6 months. Equity markets subsequently reached further into the stratosphere and the Dow and the S&P 500 made new all time highs.
A number of Fed governors expressed their desire to bring interest rate increases forward. The Fed has run out of ammunition and some commentators have expressed the opinion, that if interest rates are not increased, this monetary tool will be rendered redundant should another economic downturn come home to roost.
The argument for raising rates also relates to inflationary…
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