When The Fed starting to raising interest rate?, There aren't many reasons why the Federal Reserve cannot begin raising interest rates in 2015. There is so many things to re-calculate, But then maybe the Fed should wait until 2016 for USD as a safe haven currency
As reported from Business Insider, In a research note Tuesday, Goldman Sachs chief economist Jan Hatzius makes the case for both scenarios. Goldman forecasts that the Federal Reserve will hike in September because the economy is growing as expected. Supported by "good enough" economic data
Here's complete explanation by Hatzius:.
"For the first time in many years, the case for higher short-term interest rates looks reasonable to us, at least in the economic base case."
"Exhibit 1 shows that the resulting path for the funds rate is very similar to the median funds rate projection in the Summary of Economic Projections (SEP.) Thus, the FOMC's policy path now looks consistent with a Taylor 1999 rule with a focus on broad labor market slack. From our perspective--which has long emphasized that headline unemployment rate U3 is an incomplete measure of labor market slack--this seems like a sensible policy in the FOMC's base case for the economy (which is broadly similar to our own at this point)."
And that's not a given, so the Fed may have to wait until next year.
"Nevertheless, we still see a strong risk management case for delaying liftoff," Hatzius wrote.
Labor market slack, Apart from doubts about how the economy performs in the short term, there's dispute over whether the headline unemployment rate – which is at a seven-year low – accurately captures the amount of slack there is in the labor market. Conclusions The Federal Reserve needs more good economic data before raising interest rate
As reported from Business Insider, In a research note Tuesday, Goldman Sachs chief economist Jan Hatzius makes the case for both scenarios. Goldman forecasts that the Federal Reserve will hike in September because the economy is growing as expected. Supported by "good enough" economic data
Here's complete explanation by Hatzius:.
"For the first time in many years, the case for higher short-term interest rates looks reasonable to us, at least in the economic base case."
"Exhibit 1 shows that the resulting path for the funds rate is very similar to the median funds rate projection in the Summary of Economic Projections (SEP.) Thus, the FOMC's policy path now looks consistent with a Taylor 1999 rule with a focus on broad labor market slack. From our perspective--which has long emphasized that headline unemployment rate U3 is an incomplete measure of labor market slack--this seems like a sensible policy in the FOMC's base case for the economy (which is broadly similar to our own at this point)."
And that's not a given, so the Fed may have to wait until next year.
"Nevertheless, we still see a strong risk management case for delaying liftoff," Hatzius wrote.
Labor market slack, Apart from doubts about how the economy performs in the short term, there's dispute over whether the headline unemployment rate – which is at a seven-year low – accurately captures the amount of slack there is in the labor market. Conclusions The Federal Reserve needs more good economic data before raising interest rate
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