Why the Federal Reserve is timid on rates
Why is the Fed so nervous about raising the US cash rate when keeping it at emergency levels carries risks? The answer could well boil down to a number that haunts US policymakers. That number, which stands for a year, is 1937. That’s when US policymakers crushed the US post-Depression recovery by tightening fiscal and monetary policy. The Fed seems concerned that rate increases could set up a similar, even if less dramatic, crunch today. The Fed is right to be wary of the most-likely mistake it could make in today’s circumstances because the majority of its counterparts have so blundered. There are three reasons, though, why the Fed is likely to overcome its timidity before too long. The first two reasons are grounded within the Fed, while the other is political. Click here to read the full article: (VIEW LINK)
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