Some things never change. Apparently, the interest rate for Federal funds is one of them.
To the surprise of no one – except the “experts” and journalists who have been writing about an anticipated rate increase – the Federal Reserve Board voted last week to keep interest rates flatlined at about zero, which is where they’ve been since 2008.
The Fed may not have raised interest rates, but it at least raised interest this time. The International Business Times called it, “one of the most widely anticipated Federal Reserve decisions in decades.”
Really? Why was this meeting any different from previous Fed meetings where interest rates remained unchanged? Because the media-academic-pundit intelligentsia decided that it was time to increase rates.
In a Wall Street Journal poll of economists in August, 82% of economists thought the Fed would raise rates in September. The week before the Fed met, 46% picked September as the most likely time for the Fed’s rate hike, 9.5% said the Fed would wait until October and 35% predicted that the Fed would wait until December. Just 9.5% predicted the Fed would wait until 2016 to raise rates.
The economists polled don’t have seats on the Federal Open Market Committee, but everyone assumes they must know something. (more…)