Federal Reserve Likely to Raise Interest Rates in September
Future interest rate hikes from the Federal Reserve will all depend on the economy, officials say, but the outlook appears to be optimistic.
Federal Reserve Vice Chairman Stanley Fischer spoke with Bloomberg earlier this week about the rumored interest rate increases coming in September, though by how much — or how many, in the case of a series of hikes — he wouldn’t yet say.
An increase from the Federal Reserve would mark only the second government intervention in the interest market since the housing balloon collapsed in 2009 and sent the global economy into a long recession.
However, officials seem much more optimistic this year about the economy’s growth. The interest decision will ultimately depend on a number of factors that are still evolving.
“The work of the central bank is never done, and I don’t think you can say ‘one and done’ and that’s it,” Fischer said. “We can choose the pace [of an increase], but we choose the pace on the basis of data that’s coming in… It depends entirely on what is happening in the economy.”
The data Fischer mentioned includes reports on employment and inflation as well as the manufacturing and service industries.
Though the future of the economy depends on a number of wide-ranging factors, one thing we can all feel positive about, Fischer said, is employment.
“Employment is very close to full employment,” he said, noting that the unemployment rate has hovered near a low five percent over the past year. That’s also important for the mortgage market, which could be largely affected by an interest hike, since sticking with your employer through the home buying process is crucial to acquiring a loan.
Any pessimism or skepticism from economists is “about growth and that problem is largely about productivity growth, something which is very hard to control by policy makers,” Fischer explained.
Reserve Chair Janet Yellen also discussed last week the likely potential for an interest increase, though offered no specific details.