Posted on 06/04/2015 7:49:29 AM PDT by Citizen Zed
In an annual review of the United States economy, the I.M.F. said growth had been slower than it expected, and it cut its 2015 forecast to 2.5 percent, from 3.1 percent. While growth is likely to strengthen in the coming months, the I.M.F. said the Fed risked moving too quickly if it started raising rates this year.
“We are saying that the economy would be better off with a rate hike in early 2016,” Christine Lagarde, the fund’s managing director, said at a news conference Thursday.
(Excerpt) Read more at mobile.nytimes.com ...
Just a little longer. ;)
Meanwhile, a lot of responsible people are spending less and saving more because they can't grow savings. I would hypothesize that the low interest rates are part of the problem.
Higher interest rates would make it more difficult for spendthrift governments to borrow more money and service their existing debt. Therefore, those governments will find all sorts of reasons to keep interest rates low.
The Fed had no intention of raising rates anyway. They know the condition of the economy, without double seasonal adjustments, and their member banks. Their statements to the contrary were simply a bluff to convince broke and tapped out consumers (who make up 70% of GDP) to spend, on credit if necessary. Apparently we weren’t getting the message.
Once you start manipulating things, there’s a danger that if you do it long enough, you will actually change the system itself. This is what is happening with the Fed in my opinion. It has suppressed interest rates for so long that that the economy has now become conditioned to lower rates. Its not unlike drugs causing a dependency.
The detox process in going to be painful, but that is a good thing in the long term. The restoration of a normal rate environment based on market forces would be healthy in the long run.
Their statements to the contrary were simply a bluff to convince broke and tapped out consumers (who make up 70% of GDP) to spend, on credit if necessary.
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Totally agree. Its all a show.
Good post.
True that. Even a 1% rise would significantly increase debt service costs. Governments love all that cheap money.
I think the first rate increase will come in early 2016, not in 2015.
Just long enough to get Obola through and blame it on the republican president.
If a Republican should be elected president, the next interest rate hike will occur in November 2016. ;)
“Just long enough to get Obola through and blame it on the republican president”.
YES, we have a winner
Despite the fact GDP contracted almost 1% in 1Q. Considering this GDP was provided by obamatollah's minions, odds are the contraction is even greater.
2.5% growth? Just another lie by these communists.
I don't think the shysters running the financial institutions care which party is in power as they are both bought. Off the top of my head I can only think of three Senators who have called attention to this. And only one of them is Republican.
“While growth is likely to strengthen in the coming months,”
I’m not seeing it. They’ve adjusted the gross GDP to -.7 in the first quarter and I have not seen any sustainable growth this quarter.
We could be talking another recession (blasphemy I know)
The Fed has had more than a few opportunities to start the process of gently increasing rates in the last few years. So one may reasonably ask why they did not do this under Obama’s watch. The process of rate normalization is necessary and would have benefitted the economy.
The point is, there are certainly political undertones within the Fed. They have their ideological leanings and their political loyalties. I don’t think anyone doubts that. Does this effect their decisions? I believe it does to some extent.
Traditionally Republicans have have been more reliant on corporate fund raising, while the Democrats have turned to labor. Lately both sides appear equally bought. This is apparent when you look at financial service donations over at open secrets. As long as they hold the strings I don't believe they care who does the dance. If they were truly savy, which I believe they are, they would realize that the best outcome is obtained by cycling both parties. The Republicans and Democrats each do their part.
Raise your hand if you are shocked. LOL!
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