Fed Reveals: All Signs Point to December Interest Rate Hike
All signs seem to point to a December interest rate hike. On Wednesday, the Fed revealed an official account of its October policymaking meeting, where most officials said they believe the economy will be ready for higher rates by the end of the year.
Short-term interest rates have been held near zero since December 2008 as part of an effort to stimulate economic growth. But with officials more confident in a healthy economy—and the threat of inflation looming—they believe now is the time to start raising rates at a gradual, and even glacial, pace, the New York Times reports.
Since the October meeting, data supporting a rate hike has remained strong, including the addition of 271,000 jobs in October. Meanwhile, financial markets had already raised the odds of a December rate increase to about 66%.
William C. Dudley, the president of the Federal Reserve Bank of New York, said investors appear to be ready for the Fed to start normalizing rates. He says this would probably be "the most well-advertised, discussed, thought-about, mused-over" rate increase in history.
Officials who oppose the rate hike worry that a global downturn could cause a setback in the economy. Those in favor one say delaying a rate hike could signal a lack of confidence in the economy. [NYT]
