The St. Louis Federal Reserve Bank President has hinted that interest rates could remain ultra-low until 2012.
Goldman’s giant interest rate call could end up right…
Low rates could keep sending investors into stocks, especially if stocks’ dividend yields are strong.
“You could take back some of the quantitative easing, not in a really rapid way, but in a slow way as the economy improves–that might be a helpful way to proceed while you are waiting for the day to raise interest rates,”
“We’ve got to be very good at what we do” to unwind them in an orderly way, he said. “You want to…foster recovery over the next year and into 2011 and you want to make sure you’re on track… (But) the economy can be very unpredictable,” he said, “So if it goes in the wrong direction here, we have to be prepared to move.”
“If you look at…how the FOMC has behaved in the past, it’s been two-and-a-half to three years before we’ve raised rates after the end of a recession. So if you think the recession ended in the summer of 2009, two-and-a-half years later is a long ways—it’s all the way to 2012.”
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