David Kirkpatrick

March 7, 2010

Look for the Fed to raise interest rates this fall

The Federal Reserve has already borrowed $200 billion and parked it in the Treasury for just this move.

From the second link:

Most U.S. business economists expect the Federal Reserve to raise benchmark interest rates within six months by between a quarter and a half percentage point, according to a survey released on Monday.

A majority of economists in the National Association of Business Economists’ semiannual survey found the Fed’s current stance of rates near zero percent is appropriate. A growing number, however, believe the U.S. central bank’s policy’s are too stimulative, according to a poll of 203 members taken February 4-22.

“A majority believes that a rise in interest rates is both likely and appropriate in the next several months,” said NABE President Lynn Reaser.

February 24, 2010

The Fed’s borrowing $200 billion …

… to prep for raising the interest rate.

August 18, 2009

Economic indicators …

Filed under: Business — Tags: , , , , , , , , — David Kirkpatrick @ 3:06 pm

… are analyzed, talked about, reported on and used to justify almost any position you might want to take on the state of the economy at any given moment — and can successfully be used to prove both sides of the argument.

This article lays out the “hows” and “whys” of a whole slew of leading and lagging indicators, so hit this link if you want a little more information on where all those figures are actually coming from and what they really mean to the economy.

From the link:

To determine the health of their patient, economists look to indicators, such as unemployment and consumer spending, in much the same way doctors monitor blood pressure and heart rate. One reading can’t provide enough information to understand the state of the economy. Several together can lead to accurate conclusions.

Earlier this year and in late 2008, many indicators pointed to the economic equivalent of a massive coronary. The U.S. economy has been in the longest recession since World War II. While there have been improvement, concerns remain. Will the economy suffer further setbacks or is it on the mend? No predictions can be guaranteed, but several key indicators point to a continued recovery. With the benchmark S&P 500 Index up about 50% in the past five months, a lot of money is riding on the economy returning to growth this year.

January 29, 2009

Interest rate remains a floating point below 0.25%

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 5:44 pm

I still think this “floating point” business is one of the crazier things to come out of the ongoing financial crisis and the Fed’s shatter-shot approach to fixing things.

From the link:

Despite all of the new programs the Federal Reserve has created in the past 18 months to deal with the financial crisis, there is one thing even Chairman Ben Bernanke was unable to overcome: the number zero.

The Federal Open Market Committee ended its two-day meeting Wednesday deciding to leave the nation’s interest rate unchanged at the range of 0% to 0.25%, saying the economy remains “weakened” and did not expect any economic recovery to occur until later this year.

However, the bank announced in its statement that it would consider purchase more assets or buying longer-dated securities – possibly the 10-year bond – outright if circumstances warranted. 

“Information received since the Committee met in December suggests that the economy has weakened further,” the Federal Reserve said in its statement. “Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly.”

December 15, 2008

Funds rate going below 1%?

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 1:56 pm

Looks pretty likely.

Wow. We are in strange times indeed.

From the link:

With the country spiraling deeper into recession, the Federal Reserve is ready to slash its key interest rate _ perhaps to an all-time low_ in hopes of cushioning some of the economic fallout felt by many struggling Americans.

To battle the worst financial crisis since the 1930s, Fed Chairman Ben Bernanke and his colleagues already have ratcheted down their main lever for influencing the economy _ the federal funds rate _ to 1 percent, a level seen only once before in the last half-century.

The Fed opens a two-day meeting Monday to assess to economy and decide its next move on rates. Another reduction to the funds rate, the interest banks charge each other on overnight loans, is all but certain to be announced Tuesday.

Many economists predict the Fed will cut its rate in half _ to just 0.50 percent. A few think the Fed could opt for an even more forceful action _ lowering rates by a whopping three-quarters percentage point or more. If that larger cut occurs, it would be the lowest on records that track the monthly average of the targeted funds rate going back to 1954.

Even an aggressive rate reduction won’t turn the economy around, analysts said.

“It is not so much going to give the economy a big push forward. It’s more a case of trying to help the economy from being pushed further backward by all these negative events,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

However deeply the Fed decides to cut rates, the prime rate _ now at 4 percent _ for many consumer and small-business loans would drop by a corresponding amount. The prime lending rate is used to peg rates on home equity loans, certain credit cards and other consumer loans. Cheaper rates could give pinched borrowers a dose of relief.