Lagarde: The Fed should wait until 2016, even if there’s a risk of “overinflation”.
No, it’s not a higher inflation target. It’s unintentionally overstepping your inflation target…
Except on purpose.
This has been a bad week for anyone hoping for a June hike… or even a 2015 hike. The week started out with Fed governor Lael Brainard introducing a new condition by which the Fed would gauge rate-hike readiness: The economy of the “world” needs to get better first.
It may be impossible for the Federal Reserve to raise interest rates until the rest of the world economy improves, Fed board member Lael Brainard said on Tuesday, in the most direct acknowledgement yet of how weak global markets could handcuff the U.S. central bank.
Then while stunned rate-hike watchers had barely caught their breath, Fed governor Bullard announced that the Fed would hike rates (and likely tank the world economy) only if and after the world economy stops looking like it’s tanking of it’s own accord:
“I would like to move on the back of good news, basically, and I think it’s very difficult to say that you’re trying to normalize interest rates just at the moment where the economy looks a little bit weaker”
Just when we thought there would be no more unintentional “Low Rates Forever” indicators in the form of self-limiting policy opinions from the world’s economic elite, here come’s Christine Lagarde, who for some unknown reason feels that making public recommendations to the Federal Reserve is within her purview:
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