Ex-Fed President Bernanke: Fed Will Not Be Raising Interest Rates

Market Trends - 11/08/2016

Former president of the US Federal Reserve Ben Bernanke said that his ex-colleagues at the Federal Reserve will be hesitant to rate interest rates anytime soon. The former President, who now serves on the board of the Brookings Institute wrote in a blog post that the hiking of interest rates under current conditions would be detrimental to investors, leading them astray. Bernanke said that most Fed officials were wrong on their economic forecasts over the past several years.

 

His comments come at a time when Fed officials are treading a cautious path. Futures for interest rates continue to show that the markets expect the Fed to hike rates only once this year. However, at the Fed's most recent meeting in July, officials said that a case for a rate hike in September is still open, despite the markets discounting any rate hike. While the past two payrolls reports for June and July have been solid, with average job payrolls coming over 200k, wage growth has been a cause for concern. Earlier this week, the quarterly nonfarm productivity showed a -0.50% decline, underlining the fact that wage growth remains subdued. Inflation has also remained tame over the past few months. The US dollar gave up the gains made from last Friday's payrolls report after the release of the weak productivity data.

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