06 November 2015

Crap, the Fed is Going to Go all Neanderthal Now

You see, we have pretty good news for October on the job front, which means that the Federal Reserve is now much more likely to raise rates:
Hiring at American companies shifted into higher gear in October, helping to lift wages and clearing the path for the Federal Reserve to raise interest rates next month.

The 271,000 jump in payrolls reported by the Labor Department on Friday was much more robust than expected and suggested that economic growth had enough momentum to allow the central bank to begin its move away from the ultralow, crisis-level interest-rate policy it has been following for seven years.

Along with altering the landscape for policy makers in Washington and traders on Wall Street, the strength in the labor market, if it persists, is expected to shift the political debate as the 2016 presidential campaign heats up.

While there is still a possibility the Fed could hold back, the underlying solidity evident in the latest jobs report will strengthen the hand of monetary policy hawks who have long favored an increase in short-term rates. At the same time, it should reassure Janet L. Yellen, the chairwoman of the Federal Reserve, and a majority of her colleagues at the central bank that the economy can handle modestly higher borrowing costs without stress.

“It was pretty much everything you could ask for in a jobs report,” said Michelle Meyer, deputy head of United States economics at Bank of America Merrill Lynch. “Not only was the headline number strong, but there were upward revisions for prior months, the unemployment rate fell and wage growth accelerated.”
I don't know when the Fed will raise rate, but I am almost certain that when they do, it will be too soon.

The cultural imperative of central banks, including the Fed are such that they always err on the side of mindless inflation concerns.


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