The Federal Reserve’s annual meeting is underway in Jackson Hole, Wyoming, and Fed watchers from across the country are looking for clues as to when the central bank might raise interest rates. Most economists believe the Fed will raise rates sometime in first half of 2015, and hope Fed officials will help to solidify their projections. Before interest rates rise and the cost of borrowing increases, senior living providers and others seeking capital to refinance debt, acquire senior housing assets, or for other purposes, should contactCambridge Realty Capital to learn more about the many different financing options it offers.
Economists Concerns Over Interest Rates Grow
According to a recent survey conducted by ConvergEx Group, many financial industry professionals are concerned the Federal Reserve will wait too long before increasing its benchmark federal funds rate. Of the 219 people surveyed, 59 percent believe the Fed is behind the curve on interest rates, and that those rates should be higher. Only 32 percent of respondents believe interest rates are at the right level today. These results coincide with a Wall Street Journal survey finding that an overwhelming majority of private economists are also concerned the Federal Reserve will wait too long before increasing interest rates. Industry professionals and economists hope Federal Reserve officials in Jackson Hole will allay their fears.
A number of presentations at Jackson Hole will focus on labor markets in countries around the world, including the United States. Although the domestic labor market has improved significantly in the past year, Fed Chairwoman Janet Yellen believes there is still considerable slack in the job market, and keeping interest rates low can help address this problem. She has pointed in the past to low wage growth as an indication the economy needs continued stimulus. However, many economists hold the opposing view, believing the economy has improved to the point where it can support an increase in interest rates without negatively affecting the labor market. They point to the second quarter’s four percent GDP growth and a steep reduction in the unemployment rate, from 7.3 percent this time last year to 6.2 percent in July.
James Bullard, president of the Federal Reserve Bank of St. Louis, previously stated that “The idea that the Fed might get behind the curve is a powerful one, and that’s certainly been the history of the institution. People are right to worry about that.” Economists preferring to see the Fed raise interest rates are happy Mr. Bullard understands their positions, and hope that he and other Fed officials sharing his view will convince their colleagues of the importance of not falling behind the curve when dealing with interest rate increases.