Arab Today, arab today easy fed policy wins praise as rate stance about to shift
Last Updated : GMT 06:27:13
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.

 

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*

Arab Today, arab today easy fed policy wins praise as rate stance about to shift Arab Today, arab today easy fed policy wins praise as rate stance about to shift

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today 5 Crafty Must-Have Limited-Budget Ideas

GMT 17:03 2017 Saturday ,25 March

5 Crafty Must-Have Limited-Budget Ideas
Arab Today, arab today Rebel supporters flood Yemen streets

GMT 06:39 2017 Monday ,27 March

Rebel supporters flood Yemen streets
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today Trump to roll back Obama clean power plan

GMT 11:10 2017 Monday ,27 March

Trump to roll back Obama clean power plan
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Uber grounds self-driving cars

GMT 09:11 2017 Monday ,27 March

Uber grounds self-driving cars
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Nermein Al Fekki films “Foxes in the Valley”

GMT 09:58 2017 Saturday ,25 March

Nermein Al Fekki films “Foxes in the Valley”
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head

GMT 18:57 2017 Tuesday ,21 March

Accessories designer reveals her new collection

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures

GMT 20:03 2017 Saturday ,25 March

Health expert warns from dust sensitivity

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 06:04 2017 Tuesday ,28 March

Saudi Arabia ranks 3rd globally for smartphone use

GMT 19:27 2017 Saturday ,11 March

Boualsof launches "Priestess Kahina" collection
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