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.
Yellen told the Joint Economic Committee that “the economy has made further progress this year” toward the Fed’s employment and inflation goals. And indeed recent economic reports have borne that out, including those released last week: Continue reading "The Screws Tighten On The Fed As The Fed Readies To Tighten"