[Class Number]
According to this article, the Federal Reserve’s decision about raising interest rates are still clear and straight, the only question is when it is going to happen. The whole financial market is keeping an eye on the Fed starting from December as it is the first time the rates have been raised since the crisis in 2008. The first step was only raising rates by 0.25%, however, economists at Goldman Sachs are sure that the government will take the next step in order to maintain the control of inflation (Appelbaum).
Setting the rates is the Fed’s monetary policy tool used to reach the goals of sustainable economic growth and control the inflation rate. The main purpose of the current action plan is not to let the inflation go over the long run objective of 2% per year. The author highlights the fact that movements in oil prices have accelerated the inflation to drastic 1.7%, which is the highest point reached in years in the USA.
It also says, that the Fed’s path is opposite to the current European Central Bank’s rate cuts. Last week the benchmark interest rate has been decreased to 0% by the ECB. It looks like the US Dollar will reach the parity with Euro in case if the Fed and the ECB will keep working in the same way.
In general, the monetary policy of the U.S. is notably divergent from the European and Asian stimulus campaigns and the author is sure that raising rates, as the monetary tool, will exhaust its ability to control the inflation.
Works Cited
Appelbaum, Binyamin. "Fed’s Plans To Raise Interest Rates Are Delayed, Not Derailed". Nytimes.com. N.p., 2016. Web. 14 Mar. 2016. Retrieved from http://www.nytimes.com/2016/03/14/business/economy/feds-plans-to-raise-interest-rates-are-delayed-not-derailed.html
