It sounds like the Federal Reserve is going to raise interest rates on December 16.
Over the last two days, Fed chair Janet Yellen has more or less laid out her view that the Fed’s policy meeting this month will result in an interest rate increase for the first time since June 2006.
And while it seems that much of what is motivating the Fed to raise rates this month is a concern over needing to raise rates rapidly at some point in the future, the Fed’s first rate increase in over nine years will also carry some symbolic significance that is not lost on the Fed chair.
Concluding her remarks on Capitol Hill on Thursday, Yellen said:
In closing, the economy has come a long way toward the FOMC’s objectives of maximum employment and price stability. When the Committee begins to normalize the stance of policy, doing so will be a testament, also, to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession. In that sense, it is a day that I expect we all are looking forward to.
And so as much as the economic situation right now calls for action from the Fed, raising rates will be something of a coronation for the economy’s long slog back from the depths of the worst recession since the Great Depression.
Of course, both supporters and critics of Fed would likely agree that the current economic trajectory in the US is underwhelming.
But it’s easy to forget that seven years ago the fourth-largest US investment bank went bankrupt on a Sunday night and the discussion was not so much about how much the stock market would decline or how bad the recession would get, but whether capitalism would survive at all.
Things were very, very bleak.
Some will say the Fed’s easy policies have actually gotten in the way of economic progress, while others will argue the Fed should do more to support the current recovery.
Either way, the economy has certainly made a considerable amount of progress that both critics and supporters would likely acknowledge exceeded most reasonable expectations a few years ago.