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The last two Fed rate cutting cycles
Wednesday, November 04, 2009
Today's decision to keep short-term interest rates unchanged marks month 26 of the current interest rate cutting campaign, Fed chief Ben Bernanke outdoing his predecessor Alan Greenspan in almost every way.
Is there any reason to think that the current cycle will see interest rates rise sooner than they did last time when it took a full 42 months from the first cut to the first baby-step hike?
More importantly, what does the chart above portend for next time, or, do we now share the same future as 1990s Japan where there is no next time - it's ZIRP from here on out?
2 comments:
It might be interesting to compare Prime rates in the two cycles--my guess is that they didn't come down much this last time. A low Fed Funds rate doesn't help anyone but the speculators.
The 2001 rate cuts were held low for so long to help the re-election of Dubya in 2004. I am not so sure Obama get the same help from Ben.
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