Federal Reverse kept the interest rate at its current level, meaning between 0% and 0.25%. However, now is not the only priority, let's focus a bit on the future. And it is where it gets interesting. Federal Reserve provided expectations about if the interest rise should happen in 2016 or later or if it should be in 2015. The result are that 13 Fed policymakers still thinks the interest rise will happen in 2015, meanwhile 4 policymakers will hold it until 2016 and later. In June, the result was 15 for the rise in 2015, and 2 for holding it. Meanwhile, markets feels like confident the interest rise won't happen since awhile. It doesn't feel like they just got a month or two, but they got a full year at low rates. Why markets believe that so hard? Do you think the Fed policymarkers are right here?
The Fed has been incapable of raising the rates for way too long. They are waiting for the perfect time when they can be 100% sure that it won't have the negative effects they are so afraid of. Thing is, usually that kind of a perfect time never comes. There is always some sort of headwinds going on. They should definitely do it in 2015 though, it's already so very late.
Agreed. Zero rates is not any sort of normal, particularly for 7 years. They seem to be too concerned with what happens short term in markets, and are in all likelihood politicized as well these days. It appears that the markets are actually finally starting to sell off because of rates being at zero for a longer and longer period of time. If we have a couple of consecutive quarters of a decline in GDP or some other problem, they are limited as to what measures they'd be able to take.
