FOMC minutes: A few see chance of rate hikes "relatively soon"

In the last meeting chaired by Ben Bernanke, a few on the FOMC saw a chance of rate hikes "relatively soon." As for forward guidance in which the Fed promised to hold Fed Funds near 0% after the 6.5% unemployment rate threshold was crossed - it's pretty much done with. “Participants agreed that, with the unemployment rate approaching 6.5 percent, it would soon be appropriate for the Committee to change its forward guidance."

As for how that guidance might be replaced, there looks to be some confusion, with some wanting a lower threshold, and others not so interested in a hard number.

The minutes show little concern about the string of soft economic data to start the year (meeting was held Jan. 28-29). "Participants cited a number of factors that were likely to continue to underpin gains in household spending, including rising house prices, growing confidence in the sustainability of the economic expansion, increasing payrolls."

Comments (18)
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    Americans on a fixed income, 40 million strong, DEMAND an interest rate hike NOW!
    19 Feb 2014, 02:11 PM Reply Like
  • King Rat
    , contributor
    Comments (1902) | Send Message
    Yes, that is their civil right! High rates for fixed income, low rates for mortgages!


    No, that does not go far enough. Let's just make housing, food, gas, cell phones, and internet free, all jobs pay $40/hour, and demand 0% inflation. Let's throw in free unicorns with 3D glasses to better see the rainbows.
    19 Feb 2014, 02:24 PM Reply Like
  • Minutemen
    , contributor
    Comments (2296) | Send Message
    I might be interested. What's the trade-in plan on those free cell phones?
    19 Feb 2014, 02:33 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    I think people who fought in WWII, Korea and Vietnam are just some of the Americans who deserve more than a 0.02% return on their savings accounts but, hey, I could be wrong...maybe they don't deserve that at all.


    Remember when decent income could be derived from a certificate of deposit or a money market account?


    If not then you are younger than 45.
    19 Feb 2014, 03:35 PM Reply Like
  • mobyss
    , contributor
    Comments (2653) | Send Message
    You know, when you see the yield curve invert you can always load up on 10-years and ride the coming recession out.
    19 Feb 2014, 03:38 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    How can you guarantee that principal will not decline?
    19 Feb 2014, 03:39 PM Reply Like
  • Brice Mckalip
    , contributor
    Comments (201) | Send Message
    I think Modyss' point was that the principal WILL decline.
    Capital doesn't deserve a guaranteed return; it can either take the low and even negative returns of safety or take the market risks of equity.


    As someone who is admittedly under 45 I may be off base, were those CD returns you reference really that good after taxes and inflation? 12% CD return @ 35% tax rate looks pretty messily with high single digit inflation rates.
    20 Feb 2014, 01:11 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    Brice, I think the younger folk are unfamiliar with the world of savings before the Federal Reserve raped it.


    I doubt many young people have even heard of the phrase "passbook savings account".


    That is the problem.
    20 Feb 2014, 10:08 PM Reply Like
  • King Rat
    , contributor
    Comments (1902) | Send Message
    What I wonder is, did they expect labor participation rate to be so low when they drew this 6-7% line in the sand? At constant labor participation when rates first went to ZIRP, we'd be north of 8% unemployment still.


    Let's be honest, ZIRP is setting a foundation of latent inflation. $trillion annual Fed stimulus on top of that is napalm for the fire. ZIRP should have been ended long ago and Fed stimulus never should have happened. Worst come to worst, a few investment banks would have gone belly up and a lot of quants would have had to go back to developing alternative energy instead of skimming off the top of mutual funds our 401ks invest in. The recovery is slower and weaker than any projection estimated would have happened had nothing been done, meaning the policies did worse than had the investment bank-led politicians did nothing at all.


    Of course I want interest rates to normalize, but I find it amusing that the hand forcing interest rate normalization is moving faster than expected because bogus employment numbers are making the economy look healthier than it really is.
    19 Feb 2014, 02:38 PM Reply Like
  • Brian Dightman
    , contributor
    Comments (122) | Send Message
    Do I sense a little reverse psychology in the 'relatively soon rate hike' mention? It is as if The Fed is trying to convince us they see much stronger economic strength than most in this country are experiencing.
    19 Feb 2014, 03:50 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (20531) | Send Message
    What a load of crap the Fed is dishing out now.
    19 Feb 2014, 03:52 PM Reply Like
  • Ray Merola
    , contributor
    Comments (7046) | Send Message


    What do you mean? Please explain some more. What's being dished out?


    I thought at some point the Fed would wind down tapering; and despite our friends in Washington, the American economy will eventually experience sustained growth once again.
    19 Feb 2014, 04:16 PM Reply Like
  • xxavatarxx
    , contributor
    Comments (4933) | Send Message
    Housing has also recovered, people are lending again, etc, etc.
    At some point continuing to buy X dollars in bonds and mbs isn't doing much.
    Diminishing returns have been hit.
    19 Feb 2014, 04:19 PM Reply Like
  • ilikemoney
    , contributor
    Comments (17) | Send Message
    As long as they are going with their gut instinct and not looking at data.
    19 Feb 2014, 04:30 PM Reply Like
    , contributor
    Comments (2) | Send Message
    While I sympathize with retirees who would like to see interest rates rise so that they could see some more substantial income on their retirement "investments" such as cd's,bank accounts and the like, I'm happy to see interest rates remain on the low side as I have adjustable rate loans on multiple properties which has helped cash flow in a big way. if they do start tightening,let's hope they do it slowly so that I have time to make some adjustments to the portfolio.
    19 Feb 2014, 11:15 PM Reply Like
    , contributor
    Comments (173) | Send Message
    "No, that does not go far enough. Let's just make housing, food, gas, cell phones, and internet free"


    I believe they already do that for those who don't/won't work.


    ....with those that worked and saved and getting zilch on savings for doing so...footing the bill.


    I believe it's referred to as.. "Redistribution of Wealth"
    20 Feb 2014, 06:56 AM Reply Like
  • Brian Bain
    , contributor
    Comments (1109) | Send Message
    More Fed confusion and forward guessing.
    20 Feb 2014, 09:09 AM Reply Like
  • Mike O
    , contributor
    Comments (5) | Send Message
    White ivory tower rulers don't grovel with the masses. They have no windshield or rear view mirror to see reality. Only equations, mathematical formulas and models in which they stucture the "system" in the dark windowless recesses of a demigod mind. Dare attempt to call out that the emperor, err excuse me, the chair, has no cloths will be met with utter disdane and castigation by all dependants.


    To bad the chair isn't of the high voltage type, providing the necessary sensibility shock!


    "...[because] those who torment us for our own good will torment us without end for they do so with the approval of their own conscience." - C S Lewis


    20 Feb 2014, 10:22 AM Reply Like
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