As stated in the WSJ: “If the economy is indeed at full employment and they wait too long to raise rates, they risk letting inflation take off. But if there is more slack in the labor market than the jobless rate suggests, they could lift rates too soon and crimp the recovery”
So. Where are we in the unemployment cycle? Do you think the fed raises rates? What poses more risk, inflation or a premature rate hike?
the unemployment rate doesnt say much cuz ppl exited the workforce and will likely rejoin when things get better. Ppl rejoining will keep wages stifled. i personally think rising wages is the best way to see if the unemployment cycle is getting better. wages are going up for ppl skilled right but going down for unskilled. we need a broader base rate rise that isnt fueled by hikes by the govt through min wage but by private sector due to competition.
i think fed should not raise rates juss cuz everyone else is easing, a stronger dollar will mess the world up cuz they all for the most part owe dollar denominated stuff. i say err in the side of caution. print until we see signs of inflation.
The impact of raising rates is already priced into the market. Question is, how far will the fed raise rates? I personally would like to see the financial economy return to normal as soon as possible. It’s impossible for the fed to return the market to normality without creating some unintended reverberations throughout the market. The longer they wait the worse the consequences could become.
The unemployment rate does not give a good estimate. I believe the underemployment rate is a better indicator, including those working part time when they want full time work and those who are working jobs they are over qualified for. That is currently a lot of people which is why wages haven’t shown signs of increasing.
i think they should raise rates. While not great, we are at a better place than 2008 when they implemented emergency measures. I don’t think it matters if they raise or not, or when liftoff occurs. Rather what is most important is the pace of hikes
id agree that its prolly priced in juss by reading what ppl talk about. consensus expects june or september. im saying if they do it now it doesnt make sense juss cuz everyone is easing.
The zero bound was put in place as an emergency measure in 2008. The economy is certainly not in the same situation today. Zero bound is no longer appropriate. That said the long run terminal rate is likely lower than the past. No need to get aggressive.
If rates go unchecked, leverage and irrational exuberance is going to cause some serious damage. The Fed is probably acting outside its mandate by raising rates right now (inflation is a non issue as the USD climbs, employment isn’t too hot). But we are heading for a big implosion if a soft landing can’t be created. Maybe it’s two or three years out, but monetary policy lags so there ya go.