Fed's Rate Increases May Come Quickly

[struggle4progress]

Two Federal Reserve bank presidents added their voices yesterday to the chorus of central bank officials warning that rising inflation may force them to raise interest rates more rapidly than many investors expect.

These officials, including Chairman Alan Greenspan, indicated publicly this week that they do not feel bound to raise rates at a "measured" pace. That was the word they used just over a month ago, in a statement issued after their last meeting, to describe the likely course of coming rate increases.

Sandra Pianalto , president of the Federal Reserve Bank of Cleveland, suggested in a speech yesterday that the inflation risks may have grown since that meeting, when policymakers decided to leave at 1 percent their target for the federal funds rate -- the rate charged between banks on overnight loans.

Since then, more U.S. businesses have been able to raise their prices, the prices of imported consumer goods have climbed and energy price spikes have "prompted concerns," Pianalto said.
<snip>
http://www.washingtonpost.com/wp-dyn/articles/A35479-2004Jun11.html

[benburch]

1. Expect the Market to plunge on this news!

This is NOT what investors wanted to hear at all!

[punpirate]

3. And, watch it not happen until after November....

Someone tracked the Fed's changes in interest rates since Greenspin took over, and without exception, they went down in Republican administrations, and up in Democratic ones. If Kerry wins in November, expect the Fed to put the hammer down by December, but not until then.

This is just talk to reinforce a shaky dollar on the international scene--just saying the above was enough to alter the market for the dollar. The Fed has pumped so much money into the economy, mostly to keep the housing bubble going, that raising interest rates now will almost certainly shut that bubble down virtually overnight.

Can't have that happen while a Republican is office, can we?

[Warpy]

4. Right, we all know inflation is back at a steep rate

even thought the few numbers DC has coughed up have been Enronned to death. Supermarket prices seem to average 10% higher here over a month ago, and we know what's happening to gasoline. The Fed should have been raising interest rates steadily over the past few months, but have been avoiding it to support the Bush thieves.

You bet we're going to see a huge jump in rates, and this will just about kill the housing market, the only thing still holding this economy together.

Whether or not Greenspan continues to hold off until November is anybody's guess. My own guess is that the old schmuck has read the writing on the wall and knows Chimpo is unelectable, and may not wait.

After all, Kerry will get sworn in just in time to bear the brunt of the economic storm.

[natrat]

6. even given that, the mkt

performed better under democratic administrations on avg.

[puerco-bellies]

2. A Fed board-member from San Francisco

Said roughly the same thing late Wednesday. I trade interest rate instruments among other things and have seen my short term Euro Dollar "put" positions gain over 15% since Wednesday less for my T-Note "put" positions. This is just the precursor to a sharp spike in interest rates and a huge devaluation of treasury notes and bonds.

[dusty64]

5. Could this have anything

to do with the latest inflation numbers being squelched indefinitely cause of "calculation problems"?

[natrat]

7. interest rates at 40 year lows

might provide quite a "snapback"---maybe housing prices will come down and me and the misses can afford that double wide we been looking at

[benburch]

9. Bet on it!

Dusty,

They know that, if they release the numbers without serious cooking, that Bush will be finished, and the numbers may have gone beyond their ability to cook them in a way that doesn't stink to high heaven!

[TahitiNut]

8. This is exacly what creditor capitalists want.

The global petrochemical corporatists have gotten theirs. Their derivative and equity positions have been enriched. Now it's the global creditors that'll be fed from the sharecropper larders. When the government is a major competitor in the credit markets, interest rates go up. Such is the inevitable result of massive debt and deficits. Greenspan has held the rates artificially low for too long.

[PROGRESSIVE1]

11. Yes he did! The rates should have gone up one point early last...

year. The economy started to expand in December 2001.

There was no reason to keep rates this low.

[Media_Lies_Daily]

10. Stand by for a continued record of personal bankruptcies and foreclosures.