Rate Hike: A Win and “Kind of Win” Situation

By | December 15, 2015

I don’t know if the economy is improving or not. I’ve heard credible arguments that interpret the employment, housing and manufacturing numbers in opposing ways. To my thinking, it should not be a matter that requires discussion after over five years of Federal Reserve zero interest rate policy. The economy should be improving after that level of effort and it should be clear, but it is not.
Interestingly, a modest rate hike satisfies both sides of the economic argument. The “statistics are good” camp will see it as an acknowledgement by the Federal Reserve that the economy is improving and an attempt to get ahead of the inflation curve, and the “statistics are being misinterpreted” side will accept it as a positive because it will give the central bank room to lower if we go into another recession. A win and “kind of win” situation.

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