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The U.S. economy lost only 11,000 jobs last month. The unemployment rate fell to 10%, from 10.2% Good news, right?
For the Federal Reserve, the new set of variables spells confusion for its stated policy: Interest rates will remain low for an "extended period."
Now the Fed is getting closer to the day when it will raise interest rates. While one month of low jobless numbers is not sufficient to say a trend has started, it will certainly bear upon the policy statement at the Fed meeting on December 15-16.
While it's too early to raise rates, the Fed could tweak its statement to create the illusion of a change in policy.
The Fed has at least one practical tool. It could raise the discount rate from its present 0.25% to 0.50%. That is a just a smidgen, but it would signal an important change in policy.
If the Fed does nothing, it faces fanning the flames of inflation.
Should the Fed raise interest rates?
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Reader Comments (Page 1 of 1)
12-07-2009 @ 9:56AM
clikdawg said...
Well, there's a problem there.
Right now, all Federal efforts seem concentrated on keeping the latest stock bubble percolating; aside from the bogus 'wealth' to be accumulated, it's an image thing: An 'up' market is about all the Administration can point to prove their plan is working.
This gives Wall Street tremendous leverage -- stage a 200-point drop and see how fast the Fed quits even thinking about a rate increase.
But even this assumes a relatively square game; as usual, however, when and if The Right People can profit from an increase, that increase will be forthcoming (after those same Right People have been warned well-enough in advance to beat everybody else out of the gate); if not, then no increase.
Y'know: What's good for Ben & Friends is good for the entity formerly known as the United States of America -- an entity whose epitaph will surely read: "They Didn't Hang Together".
And the Good Ben -- Franklin, that is -- rolls slowly over in his grave ...