Thursday, April 16, 2015

Fed's Fischer: Papers Coming Through My Computer Say That This is the Turning Point in the Economy

Those that don't think the Fed is going to hike the Fed funds rate this year are just plain wrong.

During an interview with  of CNBC, Federal Reserve vice-chairman Stanley Fischer said that "We expect that the markets look ahead somewhat, so I think—I hope—that they are taking into account that the Fed, at some point, is likely to raise the interest rate"

He said that markets "can't depend on the current situation continuing forever—or even probably—beyond the end of this year."

"We have to ask what will go wrong," he said. "I say that if we get this in proportion, we're going to be changing monetary policy from the most extremely expansionary we've been able to do in all of history, to an extremely expansionary monetary policy."

More analysis in the EPJ Daily Alert.



  1. Bob, when do you expect a rate hike then? You and Peter Schiff are two of my go-to economists, who probably agree on 90% of things, but in regard to the interest rate hike, you're on completely opposite ends of the spectrum. Schiff believes that interest rate hikes will continue to be postponed until some future unknown day (this has been his position for many years now - despite the Fed saying they would raise in 2011,2012,2013,2014, etc...). The basis of his position is that the recovery is fake (i.e. a Fed manipulated boom - again, an agreement), the economic data will continue to weaken (some of the worst data since the Lehman Bros. failure, etc..), and the Fed won't want to derail their "recovery" based upon rising asset prices and the "wealth effect." To a much lesser extent he thinks there is also some political motivation to "not rock the boat" and prick the bubble in order to help Barack's legacy, and Hillary come 2016..

    It would be interesting to hear you two debate your positions. From what I've gathered, you tend to think we are more in the ~6th-7th inning of the phony Fed recovery boom, while Schiff thinks we're in the bottom of the 9th, or even extra innings w/ the next more than overdue. If Q1 growth comes in weak, and the horrific March jobs numbers become a trend and continue to underperform, do you think that the Fed would raise interest rates in a worsening economic data environment? Especially considering they have always claimed to be "data dependent"... The only way I could see them doing this is if they didn't want to risk going into the next recession w/ interest rates still at 0%.

  2. mind you they have been talking about it for quite some time now but keep on talking about it happening 'soonish' i'll guess when you hear the screams and cries in the effort to get to the exits.we'll know they have announced a date.