{"id":15364,"date":"2015-12-17T08:35:40","date_gmt":"2015-12-17T13:35:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15364"},"modified":"2015-12-17T08:35:40","modified_gmt":"2015-12-17T13:35:40","slug":"on-us-interest-rates","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15364","title":{"rendered":"On US Interest Rates"},"content":{"rendered":"<header>\n<h3 dir=\"LTR\"><a href=\"http:\/\/www.project-syndicate.org\/commentary\/on-us-interest-rates-by-anatole-kaletsky-2015-12\" target=\"_blank\">On US Interest Rates<\/a><\/h3>\n<p dir=\"LTR\">The first US interest rate increase since June 2006 is a pivotal moment for the global economy, launching what Mohamed El-Erian, Chief Economic Adviser at Allianz, calls the\u00a0<a href=\"https:\/\/www.project-syndicate.org\/commentary\/federal-reserve-ecb-policy-divergence-by-mohamed-a--el-erian-2015-12\">\u201cgreat policy divergence,\u201d<\/a>\u00a0with repercussions in every region and financial market. The impact will be particularly powerful in emerging countries, where currencies are vulnerable to a rising dollar and tightening liquidity conditions in the US.\u00a0<i>Project Syndicate\u2019s<\/i>\u00a0commentators \u2013 some of the world\u2019s preeminent economists and policymakers \u2013 have examined the issue from four broad angles.<\/p>\n<\/header>\n<div class=\"body\">\n<p><strong>What is the immediate and longer-term outlook for US monetary policy?<\/strong><\/p>\n<p>The Fed\u2019s leaders have repeatedly said that they plan to raise interest rates much more slowly than in previous periods of monetary tightening. Such assurances from central bankers cannot always be trusted, but Fed Chair Janet Yellen\u2019s promises to move more gradually than in the past are credible, because the Fed is\u00a0<a href=\"http:\/\/www.project-syndicate.org\/commentary\/no-fear-of-fed-interest-rate-increase-by-anatole-kaletsky-2015-11\">genuinely determined to push inflation higher<\/a>\u00a0and to ensure that it never again falls much below 2%.<\/p>\n<p><a href=\"https:\/\/www.project-syndicate.org\/commentary\/us-fed-interest-rate-hike-low-inflation-by-joseph-e--stiglitz-2015-09\">Nobel laureate Joseph Stiglitz<\/a>\u00a0provides further grounds for discounting the likelihood of faster tightening. Instead of trying to control inflation, according to Stiglitz, the Fed\u2019s main concern now is to reduce unemployment and counteract inequality. To do this, the Fed must continue to stimulate the US economy with easy money. Even the quarter-point rate hike that the Fed\u2019s just announced is, in Stiglitz\u2019s view, dangerous and premature.<\/p>\n<p>Moreover, while the Fed\u2019s official responsibility is to manage the US economy, its leadership fully understands the international impact of Fed decisions. Thus, Harvard\u2019s Carmen Reinhart, an authority on global debt crises, believes the Fed will\u00a0<a href=\"http:\/\/www.project-syndicate.org\/commentary\/hidden-debt-burden-emerging-markets-by-carmen-reinhart-2015-10\">\u201cfavor gradualism\u201d<\/a>\u00a0to avoid wreaking havoc in emerging economies that are overloaded with dollar debts. In a related argument, Barry Eichengreen, the Berkeley economic historian, suggests that US monetary policy is now effectively\u00a0<a href=\"http:\/\/www.project-syndicate.org\/commentary\/why-fed-is-delaying-interest-rate-liftoff-by-barry-eichengreen-2015-11\">\u201cMade in China,\u201d<\/a>\u00a0because China\u2019s efforts to stabilize the renminbi have already tightened US monetary conditions by the equivalent of the quarter-point rate hike expected on December 16.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>On US Interest Rates The first US interest rate increase since June 2006 is a pivotal moment for the global economy, launching what Mohamed El-Erian, Chief Economic Adviser at Allianz, calls the\u00a0\u201cgreat policy divergence,\u201d\u00a0with repercussions in every region and financial market. The impact will be particularly powerful in emerging countries, where currencies are vulnerable to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[11083,7223,4896,303,305,431,460,8402],"class_list":["post-15364","post","type-post","status-publish","format-standard","hentry","category-economics","tag-anatole-kaletsky","tag-cheap-credit","tag-easy-money","tag-fed","tag-federal-reserve","tag-interest-rates","tag-joseph-stiglitz","tag-project-syndicate"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15364","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15364"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15364\/revisions"}],"predecessor-version":[{"id":15365,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15364\/revisions\/15365"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15364"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15364"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15364"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}