Several Federal Reserve officials believe that the time to raise interest rates has come. Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, is recommending that the Fed raise its key interest rate half a percentage point in order to guard against inflation[1]. Kocherlakota points out that even with the increase, rates would still be low “by historical standards.” The president of the Fed bank in Philadelphia agrees, and the president in Dallas is asking the Fed to tighten credit, though he has not specified how it should do so.
Eric S. Rosengren, president of the Fed bank in Boston, disagrees with his colleagues. He believes that “surging food and energy prices are unlikely to spark widespread price inflation”[2]. He believes that Fed policies have “pumped hundreds of billions of dollars into the US economy” and does not believe that the interest rate should be raised yet.
Do you think that it is time for rates to rise? Can we afford to wait?
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[1] http://www.crainsnewyork.com/article/20110505/FREE/110509926
[2] http://articles.boston.com/2011-05-05/business/29513542_1_interest-rates-commodity-prices-short-term-interest
