National University System Institute for Policy Research

(858) 642-8498 Get Started

Interest rate hike ahead?

EconoMeter panelists second-guess the Fed

Roger Showley, U-T SAN DIEGO

Friday, March 13, 2015

View Article

Kelly Cunningham, National University System
Answer: NO

Deciphering Federal Reserve pronouncements is truly labyrinthine, but it is clear they will not raise interest rates any time soon. Recoveries tend to be strongest coming out of recession, but the economy has now been in recovery for five years. With unemployment falling and stock market soaring, why hasn’t the Fed already raised interest rates? They are apprehensive that raising interest rates by even just 0.25 percentage point will derail whatever recovery is occurring, which speaks to how fragile the economy actually remains. And yet the longer the Fed waits, the more vulnerable the recovery becomes to interest rates rising.