If we can believe Janet Yellen – or rather those who believe in what they think she means – then the Federal Reserve is going to raise interest rates at its next monetary policy meeting in December. This is perhaps an appropriate time for it to do so, as it looks like the Fed is about to enter a new era. Pressure is growing on the central bank to reform itself and the way it does business, including making monetary policy.
Once again, the Fed has shown itself to be following rather than leading the market. Last week, in congressional testimony, Yellen said the Fed may raise interest rates “relatively soon,” which most people expect means at its December 13-14 meeting. This in the wake of the recent 60 basis point surge in long-term interest rates since Donald Trump was elected president. The yield on the Treasury’s benchmark 10-year note is up 100 bps since July 8, during which time the Fed has kept rates unchanged.
The Federal Reserve is starting to feel some heat from both the right and the left about how secret its activities deserve to be from American taxpayers. The fact that next year is a presidential election year and the heat is being brought by two candidates for the Oval Office may mean that the pressure may amount to something this time.
On January 28 Sen. Rand Paul, R-KY, reintroduced his "Audit the Fed" bill that would subject the Fed's monetary policy discussions and decisions to audits by the Government Accountability Office (GAO).
"This secretive government-run bureaucracy promotes policies that have impacted the lives of all Americans," Paul said. "Citizens have the right to know why the Fed's policies have resulted in a stagnant economy and record numbers of people dropping out of the workforce."
Previous versions of Paul's bill – originally sponsored by his father, former presidential hopeful Ron Paul, and others – have gotten nowhere, largely because Democrats controlled the Senate. Now, of course, that body is now controlled by the Republicans. Paul got 30 co-sponsors to his bill. Continue reading "Needed: More Transparency at the Fed"→
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