first_img Data Provider Black Knight to Acquire Top of Mind 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago  Print This Post The Best Markets For Residential Property Investors 2 days ago Demand Propels Home Prices Upward 2 days ago Home / Daily Dose / Economic Data Will Ultimately Determine When the Fed Will Raise Rates Demand Propels Home Prices Upward 2 days ago The Best Markets For Residential Property Investors 2 days ago in Daily Dose, Featured, Government, News Economic Data Will Ultimately Determine When the Fed Will Raise Rates Tagged with: Federal Open Market Committee Federal Reserve Interest rates San Francisco Fed Related Articles November 9, 2015 1,745 Views center_img The Week Ahead: Nearing the Forbearance Exit 2 days ago Subscribe Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Federal Open Market Committee Federal Reserve Interest rates San Francisco Fed 2015-11-09 Brian Honea Brian Honea’s writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master’s degree from Amberton University in Garland. The Bureau of Labor Statistics’ October jobs report released last week far exceeded expectations, generating widespread speculation that the Federal Reserve will raise short-term rates in the Federal Open Market Committee’s final meeting of the year in December.San Francisco Fed President and CEO John C. Williams stated in an address Friday that in the past, data that drives economic decisions clearly supported a “patient” approach when it comes to raising rates. That same data, he said, will ultimately determine when the Fed decides to raise rates this time around.Speaking to the Arizona Council on Economic Education in Tempe, Arizona, on Saturday, Williams presented arguments for both sides, and concluded that the data will determine when the rates are raised.On the side of the argument for exercising patience, Williams said there are two main concerns: One, the constraint of the “zero lower bound,” which is to say rates can’t go any lower than zero and there will not be room to lower the rates if there is another economic downturn or if inflation drops further; and two, the inflation has been “stubbornly” below the Fed’s target rate of 2 percent for almost three and a half years.“And while we can ultimately control our own inflationary destiny, as it were, there’s no question that globally low inflation, and the policies other countries have adopted to combat it, has contributed to downward pressure in the U.S.,” Williams said. “As I said, I see inflation bouncing back. But forecasts aren’t guarantees, and there is always the risk that it could take longer than I expect.”“Given the progress we continue to make on our goals, I view the next appropriate step as the start of a process of gradually raising interest rates.” John C. Williams, President and CEO, San Francisco FedOn the other side of the issue—raising rates sooner than later—Williams presented a few arguments in favor. One, the economy is a moving target—according to research, it takes a year or two for monetary policy to take full effect, so the decisions the Fed makes have to be based on where the economy is going and not where it is at present; two, raising rates “would also allow a smoother, more gradual process of policy normalization, giving us space to fine-tune our responses to any surprise changes in economic conditions”; and finally, an economy that runs too hot for too long can result in imbalances that lead to either excessive inflation (as was the case in the 1960s and 1970s) or economic correction and recession (such as in the burst of the “dot com” bubble in the early 2000s or the housing market in 2008).“And in the first half of the 2000s, the economy was propelled by irrational exuberance over housing, sending house prices spiraling far beyond fundamentals and leading to massive overbuilding,” Williams said. “If we wait too long to remove monetary accommodation, we hazard allowing these imbalances to grow, at great cost to our economy.”While Williams stated that his economic views are data-driven and that the arguments in the past for patience far outweighed the “raise rates more sooner than later” approach, he also stated that his forecast is “[W]e’ll reach our maximum employment mandate in the near future and I’m increasingly confident that inflation will gradually move back to our 2 percent goal. . . Given the progress we continue to make on our goals, I view the next appropriate step as the start of a process of gradually raising interest rates. That’s the ‘how’; as I said, the data will determine the ‘when.’” Share Save Servicers Navigate the Post-Pandemic World 2 days ago About Author: Brian Honea Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Sign up for DS News Daily Previous: Freddie Mac Plans to Use Proven Formula for Assisting HAMP Borrowers With Rate Increases Next: GSEs Announce Lowest Ever Interest Rate on Standard Mortgage Modificationslast_img

Published by admin

Leave a Reply

Your email address will not be published. Required fields are marked *