The Fed's Continuing Conundrum

Washington (Oct 31)  Coming soon to a central bank near you, in time for the Christmas shopping season, an increase in interest rates, courtesy of Janet Yellen and her colleagues on the Federal Reserve Board’s monetary policy committee. Or perhaps not. Folks living in euroland can expect the gift that keeps on giving, unless it doesn’t, more monetary stimulus. China works on a different calendar, so its people have already unwrapped their gifts, a cut in interest rates and assorted credit-easing measures. In Britain, the old naval slogan, “steady as she goes”, is likely to prove the best description of what the governor of the Bank of England has in mind. Which should all add up in the coming weeks to a strengthening dollar and less bounce in the step of exporters, inflation at only bit more than 1 percent, well below the Fed’s 2 percent target, and slowing growth. Inconveniently, just when Yellen & Co. have the last chance this year to consummate their flirtation with an interest rate increase, which they have hinted they still find attractive.  

Source: TheWeeklyStandard