easy fed policy wins praise as rate stance about to shift
Last Updated : GMT 10:28:01
Arab Today, arab today
Arab Today, arab today

Easy Fed policy wins praise as rate stance about to shift

Arab Today, arab today

Arab Today, arab today Easy Fed policy wins praise as rate stance about to shift

The Fed has kept key interest rates near zero since the subprime disaster
Washington - AFP

The US Federal Reserve, poised to hike interest rates on Wednesday, got a bad rap for defying financial orthodoxy with its ultra-expansionary response to the 2008 financial crisis.

But now even critics admit the Fed's strategy pulled the world's biggest economy back from the brink.

Since the subprime disaster and the subsequent 2009 recession the Fed has kept key interest rates near zero and injected some $3.5 trillion of new money into the banking system -- a policy known as quantitative easing (QE).

This gave the US economy exactly the boost it needed, according to Dean Baker, founder of the Center for Economic and Policy Research.

"If we hadn't had QE and low interest rate policy it's very plausible that we'd have another two to three million people out of work," he told AFP.

The US unemployment rate, which hit 10 percent in 2009, has dropped by half. Since emerging from recession, the economy has generated a net 13.5 million jobs.
Fed chair Janet Yellen has argued that low rates have benefited low- and middle income Americans, but figures suggest otherwise.

Wages have been static and inequality has worsened, according to economists Emmanuel Saez and Gabriel Zucman.

Most modest American households were no better off in 2012 than they were in 1986, they said in a study.

Housing prices, meanwhile, have embarked on a slow recovery, but are not projected to match their pre-crisis 2007 levels before 2017, according to real estate valuation experts Zillow.

The number of property transactions is still nearly a third lower than before the subprime mortgage disaster.

- And the winner is: Wall Street -

The auto sector has without a doubt been among the main beneficiaries of easy money, according to Chicago Fed chief Charles Evans. Combined with collapsing oil prices, lower rates helped auto sales reach a new annual record at 18 million.

Emerging economies have also gained from low US rates, becoming more attractive to investors looking for higher returns than American banks could offer. Even though now, analysts note, they are feeling the pinch as money flows back out on the prospect of tighter Fed credit.
But the big winner of the Fed's largesse has been Wall Street, with main stock market indices having tripled in value since the financial bloodbath of 2009.

Analysts say that Wall Street has done little more than simply return to a normal stock price growth path -- but that was by no means a foregone conclusion seven years ago.

"Where would we think the market would be if we hadn't had the crisis? It wouldn't be that much different from what we have," Baker mused.

The remarkable US recovery has occurred without any inflationary pressures -- a slap in the face of orthodox financial wisdom, and a phenomenon that economists still find hard to explain.

If anything, stubbornly weak consumer prices are the one missing piece of the economic recovery puzzle -- which is why Yellen and her colleagues may well opt for a very modest rate hike.

Another is the strengthening dollar, which Yellen herself this month said was making the Fed "cautious" on raising interest rates.

Few doubt that tighter credit on Wednesday is a foregone conclusion. But as it prepares to turn a page in US monetary policy history, the Fed's recent record is a lesson that central banks can make all the difference to the real economy.

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

easy fed policy wins praise as rate stance about to shift easy fed policy wins praise as rate stance about to shift

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

easy fed policy wins praise as rate stance about to shift easy fed policy wins praise as rate stance about to shift

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Prince's vision spurs new Cornwall village

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Airbnb raided by Japan

GMT 01:55 2017 Saturday ,18 November

Airbnb raided by Japan
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Hanan Metawe denies apology for “Major Treason”

GMT 12:22 2017 Thursday ,16 November

Hanan Metawe denies apology for “Major Treason”
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 06:13 2017 Friday ,17 November

Pope denounces healthcare inequality

GMT 05:18 2017 Thursday ,16 November

Boeing announces $27bn from flydubai

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday