Last chance: Interest rates. Will FED decide to increase them On September 18? Bad arguments from the peanut gallery.

[fromderinside]

Just had to do this one with a dart in the heart of NYT.

The article: http://www.nytimes.com/pages/busine...iniNav&contentCollection=Business&WT.nav=page

The headline: Which Fed Leaders Fear Inflation? Look at When They Grew Up

The basis for the headline:

Knowing the inflation level in officials’ early adulthood explains only 8 percent of the variation in their later hawkishness (that is, the regression analysis had an r-squared of 0.08). That is not high, and the sample is far too small to draw any firm conclusions, but it at least suggests that the theory that what people experience as young adults affects their instincts when they become middle-aged central bankers is not totally outlandish.

Even I'm calling BS on this one.

Feel free to discuss the entire rate increase topic.

 

[laughing dog]

From what I can glean, the Fed leaders think that it takes 18 months or so for current policy actions to take full effect in the economy. So, the Fed is always acting in anticipation of future economic news. I suspect the Fed will postpone any rate increase until later in the year, maybe December, since there are little to no market indications of accelerating inflation or inflationary expectations at this time.

 

[fromderinside]

OK. So the market has been reacting to fed policy in terms of rates for the last 18 months or so. The FED only indicated rates may be increased in the future with some positive statements since last December.

I'm thinking FED policy makers think the market has been anticipating an increase for about 18 months now would be a good match between your statement and the facts surrounding market activity. The FED doesn't make the market. The market guides the FED.

As for your prediction it probably depends on how much impact increased decline in China growth was unanticipated by the FED.

 

[ZiprHead]

Can't have too many people working. I say raise the rates. Having ten people fighting for every single job is good for business.

 

[Jimmy Higgins]

From what I can glean, the Fed leaders think that it takes 18 months or so for current policy actions to take full effect in the economy. So, the Fed is always acting in anticipation of future economic news. I suspect the Fed will postpone any rate increase until later in the year, maybe December, since there are little to no market indications of accelerating inflation or inflationary expectations at this time.

I don't understand this part. The 0% rate is pretty low. Why not just increase it a scooch? If inflation does start forming, wouldn't it be easier to raise rates if you aren't already so low? Let the economy slowly absorb the return to reasonable rates?

 

[fromderinside]

No other wackos out there making claims about inflation and the economy with bogus numbers and statistics. Come on guys.What about claims that we should be knee deep in inflation because of FED policy. Any stats with stories?

 

[laughing dog]

From what I can glean, the Fed leaders think that it takes 18 months or so for current policy actions to take full effect in the economy. So, the Fed is always acting in anticipation of future economic news. I suspect the Fed will postpone any rate increase until later in the year, maybe December, since there are little to no market indications of accelerating inflation or inflationary expectations at this time.

I don't understand this part. The 0% rate is pretty low. Why not just increase it a scooch? If inflation does start forming, wouldn't it be easier to raise rates if you aren't already so low? Let the economy slowly absorb the return to reasonable rates?

I suspect the increase (whenever it occurs) to be a "scooch". I am just guessing that increase will not be announced at this meeting.

 

[fast]

Hmmm, an experience instinct relationship. I suppose it (in this instance) could account for low (or parts of low) variation--but I don't see a predictive value beyond being negligable. So, a very (very) loose relationship it seems to be. We would need to know their instinct before knowing the applicable smidgen of a deviation factor to possibly forecast a slight difference in one direction or the other. I guess.