The Economic Perspective: “The Fed Stops”

I’m Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at the Fed stopping.  Mike, recently the directors of the Federal Reserve met and issued a rather dramatic statement.  They said they plan not to raise interest rates this year.  Why did they say this, and what does it mean?

Mike: Summary Answer

  1. Big shift from a year ago, when Fed was raising interest rates
  2. Fed doesn’t control all interest rates, but does control one rate that sets the standard for many other interest rates
  3. Fed had been raising rates since late 2015, when its key rate was 0%
  4. Now that rate is in a range of 2.25 to 2.5%
  5. Fed has been raising rates to head off inflation
  6. But inflation doesn’t seem to be an issue, and worry that rate hikes have been slowing the economy
  7. So Fed is pausing, and some interest rates have dropped as a result
  8. Impact – borrowing rates not higher, but so too will be investment returns on some financial products
  9. I’m MW

 

Mary: And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economic