Stunning report: Feds may not raise interest rates at all in 2015

Stunning report: Feds may not raise interest rates at all in 2015

All signs point to the Fed passing on an interest rate increase for 2015.

The Federal Reserve has yet to say whether or not there will be a coming raise on short-term interest rates. The rate increase, which many would consider an integral part of the future goings of the stock market, was rumored to have been announced before the end of the year, according to the LA Times.

However, it is becoming more and more unsure as to whether or not the rate increase will occur this year. There are two more chances, Oct. 28 and Dec. 16, the adjournment dates of the last two Federal Reserve meetings this year, for a rate hike to be implemented.

Skeptics aren’t so sure if it will happen at all this year. University of Oregon economist Tim Duy recently argued that “the economy is resting on what is likely its high water mark for growth in this cycle.”

With job growth topping out at a lackluster 2.5% annually, it is unlikely that the Fed will vote in favor of a interest rate hike.

Economist Brad DeLong of UC Berkeley also contends that the interest rate increase is highly unlikely as a result of the lack of inflation. “Optimal risk management is to wait until rising inflation is present in the data before beginning lift-off,” he wrote this week. “Interest rate increases in December make no sense, and interest rate increases in March make no sense unless core inflation starts trending up right now.”

Former Treasury Secretary Larry Summers points out the present turbulent nature of the stock markets as another reason the interest rate increase seems highly unlikely.

Because, as Bloomberg pointed out last month, no one in the Fed is “itching for a rate increase.” Jeffrey Lacker, chairman of the Richmond Federal Reserve Bank, is the sole exception, having argued for that the rate increase should have already happened.

The decision is still up in the air, though the Fed has been even less keen on a rate increase than they were last summer.




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