The US Fed hasn’t raised interest rates since 2006. The Great Recession convinced them to leave it alone or drop it. They don’t want to drop it too far, though. The ability to raise or lower rates gives them the ability to decelerate or accelerate the economy. Rates that are too low cut out half of the power of that tool. There are worries about deflation (because it is happening in various places around the world), and inflation (because it is more familiar and because the US money supply has grown enormously in response to The Great Recession.) The issue of deflation versus inflation is more complex than one number, because various goods and services act differently. The Fed, however, has to apply their rate changes in general. The hope and guess is that they will raise the rates in September, hoping to manage inflation, encourage savings, and hopefully not fuel deflation.

(Click on the chart for the link.)

“This Heat Map Shows Why The Fed’s Vice Chairman Thinks It Should Chill On Raising Interest Rates” – Quartz

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