Economy Watch: Rate Rise Next Month Unlikely
- Feb 11, 2016
Interest rates are a bit higher than they were three months ago, and while further increases may come eventually, the Federal Reserve is in no hurry to raise them, considering the jitters apparent in the global and U.S. economies recently. That was the upshot to Chairman Janet Yellen’s testimony before Congress on Wednesday, though she used central banker language to express herself.
“Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar,” Yellen noted. Foreign economic developments, in particular, are problematic, so there’s a risk that the U.S. economy will take a hit in the near future.
Yet things might not work out that way. Yellen added, “Ongoing employment gains and faster wage growth should support the growth of real incomes and therefore consumer spending, and global economic growth should pick up over time, supported by highly accommodative monetary policies abroad.”
In the meantime, the central bank doesn’t seem to be taking any chances. Interest rates are still expected to rise “gradually,” but as usual, no specifics were offered. An increase next month, however, seems unlikely, so it looks like the era of cheap money for real estate deals still has quite a while to go.